“We are upbeat as the industry looks forward to better commodity market sentiments in light of lower palm oil inventory levels, improving export demand, moratorium on new plantings in Indonesia and recovery in crude palm oil (CPO) prices,” said group President/Chief Executive Officer, Zakaria Arshad.

The strategy in 2017 shall revolve around three main thrusts – business rationalisation to make the organisation leaner; drive for operational excellence; and, selective external growth – all to be executed under uncompromising governance and transparency standards, he said in a statement here today.

Zakaria said group-wide business rationalisation would make FGV leaner and more competitive in 2017 through restructuring, divesting or collaborating with another player for those assets and investments that have been dragging profitability down.

“FGV is also reviewing its organisational structure and business model to achieve better reporting alignment and accountability, mitigation against commodity and currency volatility as well as closer oversight on associated businesses,” he said.

As for downstream, FGV shall intensify efforts to develop the destination and consumers’ market either through organic expansion, marketing agents or strategic partnership with local players, he said.

He said FGV had also been operating under a high administrative cost structure previously and in 2016 recorded substantial reduction of this cost by more than RM100 million subjected to audit adjustments.

“Our lean administration cost is now a culture and management regiment in FGV i.e. to be able to do more with less,” he said.

Zakaria said FGV’s 2017-20 Strategic Plan, which it would embark on soon, would provide a well-defined roadmap and methodology to drive sustainable growth throughout the organisation.

He also said a holistic review of joint-venture terms with key strategic partners was being performed to fully realise the win-win partnership aspirations that would translate into greater values for FGV.

“This review will ensure, among others, equitable power-sharing at operational and corporate levels, joint products and market development, roadmap on technology transfer as well as providing exposure to our human capital in global environments,” he said.

In addition, selection criteria for future strategic partners had also been tightened so that the win-win mechanisms were established and addressed upfront as the partnership agreement was sealed, he said.

He said the board had also approved several internal policies to ensure that the highest level of integrity, transparency and accountability was upheld by employees throughout the group.

The relevant subjects include the Gifts, Entertainment and Hospitality Policy and Asset & Personal Interest Declaration Policy. Both were designed to absolve directors and employees from any situation where they would be a conflict of interest, said Zakaria.

On other development, he said, FGV looked forward to holding at least 16 mill complexes Roundtable on Sustainable Palm Oil (RSPO) certified (in 2017) which would open markets that required sustainability standards.

As of Dec 28, 2016, RSPO had given FGV and the Federal Land Development Authority (Felda) separate membership registration.

“We anticipate more premiums from sustainable palm oil especially crude palm kernel oil-related products that fetch better value at this point. We also plan to have another 22 mill complexes ready for audit in 2017’ he said.

In essence, Zakaria believed that the worst was behind and he was now ever ready to lead the team in bringing FGV to greater heights and delivering the expected shareholders return in 2017.

He said 2016 proved to be a tumultuous year that saw the share price climbed from a low of RM1.33 to a high of RM2.50 before settling at RM1.55 at the end of the year.

The end of 2016 marked the ninth month of FGV under his leadership.

He said this occurred despite comprehensive improvement efforts made as outlined in his transition plan which primarily involved strengthening the core business, sweating existing assets and putting mergers and acquisitions on the back burner.

Among the key challenges encountered during his leadership tenure was severe and prolonged El Nino weather, which had negatively affected FGV estates’ yields with a similar drop experienced by national yields bringing about a higher CPO price.

On Indonesia’s Eagle High Plantation (EHP), Zakaria said market optimism developed over the first few months of his stewardship was affected by uncertainties over the EHP acquisition plan since June 2015.

“Now that FGV has signed the Termination Agreement with Rajawali Group on Dec 23, 2016, the matter has been effectively concluded. The investment is now undertaken by FIC Properties Sdn Bhd, an entity under Felda,” he said.

As for the Felda Iffco Gida Sanayi, Turkey, he said, the financial losses were currently under forensic audit and FGV was awaiting the official report before taking any further action.

“We are also finalising the necessary paperwork to claim insurance coverage on such fraud that will substantially compensate the losses recorded earlier,” he said.