Becoming a truly global company

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Mohd Emir Mavani Abdullah, Group President and Chief Executive Officer of Felda Global Ventures

Felda Global Ventures, one of the largest agro-commodity companies in Asia, is in constant expansion mode.

Inside Investor got a strategy update from Mohd Emir Mavani Abdullah, Group President and Chief Executive Officer.

Q: Would you say this is a very exciting time for FGV?

A: Yes, it is a very exciting time. Our listing was just one and a half years ago, and we are now a young, listed company ready to become global.

Q: What is your strategy in this respect?

A: Our strategy is to grow eight times larger than what we are now in the next eight years. We have a very clear growth plan and very clear targets to achieve. Growth will include our land bank, downstream activities, consumer products, and we are also transforming the way we are managing ourselves by looking into the entire value chain and cost structure. We are looking deeper at who our customers are and who the users of our products are in order to increase this customer base.

Q: How are you addressing new customer segments?

A: Our products are exported worldwide, and we are the largest producer of palm oil globally. We see that the largest market is the consumer market, especially in China and India, as well as in Middle East and Africa. These are the largest markets that consume palm oil on a food basis as well as on a non-food basis where palm oil is used, for example, for cosmetics of biodiesel, a very important market additionally in Europe and the US. For example, we do have an oleochemical plant in Boston that provides our chemicals to the non-food sector as well as the industrial food sector, we also have a canola seed and soybean crushing plant in Canada and a refinery there. We have a partnership with one of the major downstream industry players, IFFCO, which is based in Sharjah, UAE, and also a partnership with Procter & Gamble in the oleochemicals sector, and we are constantly looking at other partners to come and work together with us. Our partnership in the Middle East is very well established. They are basically the main users of our commodity and we cover the market through them.

Q: Will agriculture remain your core business?

A: Our core business is in the agro-industry, with palm oil, sugar and rubber. All other businesses are supporting this sector to grow. We have our own fertiliser company, as we are a large producer as well as a user of fertiliser, and we are also a large user of our own bulking facilities and provide these services to others. This applies to our own large in-house mills as well.

Q: What change do you expect in the palm oil business from the ASEAN Economic Community?

A: I think our palm oil business will benefit from it because we will be able to expand our plantations further beyond Malaysia. FGV has already ventured into Indonesia where we have up to 70,000 hectares of land, mostly greenfield, but we now are looking at brownfield operations as well. Myanmar is also interesting, and we are now exporting our consumer goods, such as cooking oil and margarine,  there. We are also trying to establish a rubber plantation and to acquire a rubber mill in Myanmar. We have also recently opened an office in Cambodia to sell our consumer products, and we are now going to launch an office in Cebu, Philippines. You see, we are expanding fast, first of all with consumer products, but we are also looking where to go in the upstream business, specifically in Southeast Asia. Another target market is West Africa, to where we already have sent a team to explore the upstream business.

Q: What do you expect from the world market price development?

A: Currently, we are in a bearish mood. Prices of crude palm oil have come down in 2013, but will maybe move higher in the first quarter of 2014. While that has a bit of a negative impact on our plantation earnings, it gives us the opportunity to grow faster because low commodity prices allow us to acquire some brownfield operation assets now. Later, when the crude palm oil price goes higher, nobody will be in a selling mood anymore. Thus, there is an advantage for us even though the world market prices are low.

Q: FGV has a solid dividend policy to pay out at least 50 per cent of profits. Will you be able to maintain that in the foreseeable future?

A: Yes, that will remain, definitely.

Q: What would be the legacy you want to imprint on FGV during your time here?

A: For me, it is to make this company become fully global and double its revenue over the next couple of years.

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Reading Time: 3 minutes

Mohd Emir Mavani Abdullah, Group President and Chief Executive Officer of Felda Global Ventures

Felda Global Ventures, one of the largest agro-commodity companies in Asia, is in constant expansion mode.

Reading Time: 3 minutes

Dr Emir_cut
Mohd Emir Mavani Abdullah, Group President and Chief Executive Officer of Felda Global Ventures

Felda Global Ventures, one of the largest agro-commodity companies in Asia, is in constant expansion mode.

Inside Investor got a strategy update from Mohd Emir Mavani Abdullah, Group President and Chief Executive Officer.

Q: Would you say this is a very exciting time for FGV?

A: Yes, it is a very exciting time. Our listing was just one and a half years ago, and we are now a young, listed company ready to become global.

Q: What is your strategy in this respect?

A: Our strategy is to grow eight times larger than what we are now in the next eight years. We have a very clear growth plan and very clear targets to achieve. Growth will include our land bank, downstream activities, consumer products, and we are also transforming the way we are managing ourselves by looking into the entire value chain and cost structure. We are looking deeper at who our customers are and who the users of our products are in order to increase this customer base.

Q: How are you addressing new customer segments?

A: Our products are exported worldwide, and we are the largest producer of palm oil globally. We see that the largest market is the consumer market, especially in China and India, as well as in Middle East and Africa. These are the largest markets that consume palm oil on a food basis as well as on a non-food basis where palm oil is used, for example, for cosmetics of biodiesel, a very important market additionally in Europe and the US. For example, we do have an oleochemical plant in Boston that provides our chemicals to the non-food sector as well as the industrial food sector, we also have a canola seed and soybean crushing plant in Canada and a refinery there. We have a partnership with one of the major downstream industry players, IFFCO, which is based in Sharjah, UAE, and also a partnership with Procter & Gamble in the oleochemicals sector, and we are constantly looking at other partners to come and work together with us. Our partnership in the Middle East is very well established. They are basically the main users of our commodity and we cover the market through them.

Q: Will agriculture remain your core business?

A: Our core business is in the agro-industry, with palm oil, sugar and rubber. All other businesses are supporting this sector to grow. We have our own fertiliser company, as we are a large producer as well as a user of fertiliser, and we are also a large user of our own bulking facilities and provide these services to others. This applies to our own large in-house mills as well.

Q: What change do you expect in the palm oil business from the ASEAN Economic Community?

A: I think our palm oil business will benefit from it because we will be able to expand our plantations further beyond Malaysia. FGV has already ventured into Indonesia where we have up to 70,000 hectares of land, mostly greenfield, but we now are looking at brownfield operations as well. Myanmar is also interesting, and we are now exporting our consumer goods, such as cooking oil and margarine,  there. We are also trying to establish a rubber plantation and to acquire a rubber mill in Myanmar. We have also recently opened an office in Cambodia to sell our consumer products, and we are now going to launch an office in Cebu, Philippines. You see, we are expanding fast, first of all with consumer products, but we are also looking where to go in the upstream business, specifically in Southeast Asia. Another target market is West Africa, to where we already have sent a team to explore the upstream business.

Q: What do you expect from the world market price development?

A: Currently, we are in a bearish mood. Prices of crude palm oil have come down in 2013, but will maybe move higher in the first quarter of 2014. While that has a bit of a negative impact on our plantation earnings, it gives us the opportunity to grow faster because low commodity prices allow us to acquire some brownfield operation assets now. Later, when the crude palm oil price goes higher, nobody will be in a selling mood anymore. Thus, there is an advantage for us even though the world market prices are low.

Q: FGV has a solid dividend policy to pay out at least 50 per cent of profits. Will you be able to maintain that in the foreseeable future?

A: Yes, that will remain, definitely.

Q: What would be the legacy you want to imprint on FGV during your time here?

A: For me, it is to make this company become fully global and double its revenue over the next couple of years.

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