PETALING JAYA: In a surprising turn of events, Felda Global Ventures Holdings Bhd (FGV) is set to announce the departure of chief executive officer Datuk Mohd Emir Mavani Abdullah after a three-year stint at the palm oil firm.
The decision was reached after a tumultuous 24-hour period.
A source said that FGV made the decision to replace Emir during a board meeting on Wednesday. He had earlier been recalled from the Palm and Lauric Oils Conference and Exhibition 2016 to attend a one-on-one meeting with FGV’s chairman Tan Sri Mohd Isa Abdul Samad at the company’s premises on that day.
“Emir’s top lieutenants learned about the news on Thursday morning. It came as a complete surprise to the staff,” the source said.
He is set to be replaced by Datuk Zakaria Arshad, who is the head of the downstream cluster for FGV.
As at press time, an FGV representative told StarBiz that the company was in no position to make any comments. However, an official announcement would be made accordingly if there were any developments, he said.
It has been said that Emir arrived at FGV at an inopportune time. Since being appointed as CEO in January 2013, his tenure at the company has coincided with a major decline in palm oil prices, as stockpiles built up amid a backdrop of excess supply, which ultimately impacted its bottom line.
At the same time, FGV’s stock price has also taken a beating due to the downturn in the palm oil industry, as well as the global stock market decline over the past year.
On the other hand, the company has been no stranger to intense public scrutiny after a series of acquisitions over the past few years. This may be partly because the company’s financial performance has deteriorated during this period despite billions of ringgit being spent on new acquisitions.
The company reported a net profit of RM117.12mil for its latest financial year ended Dec 31, 2015 (FY15), a substantial drop from RM325.49mil the year before.
The most high-profile deal to date is the planned stake acquisition in Indonesia’s PT Eagle High Plantations Tbk, which is still ongoing. An initial deal worth US$680mil (RM2.8bil) last year to acquire a 37% stake in Eagle High was scrapped due to a change in market conditions.
However, Emir has long defended the deals, citing the need for FGV to replenish its land bank and grow its revenue base. In an interview with StarBiz last month, he said the company was looking to acquire an additional 40,000 ha of land this year.
He also confirmed that FGV would continue to pursue growth opportunities via new acquisitions in both the upstream and downstream segments.
Another ongoing deal is the proposed purchase of China edible oils firm Zhong Ling Nutril-Oil Holdings Ltd for RM976.25mil which was announced on Feb 26.
Aside from this deal, Zakaria’s impending appointment may also be reflective of FGV’s ambitions to grow its revenue base in the downstream segment.
This is because the downstream asset earnings will provide a hedge against the fluctuations in palm oil prices, which tend to determine overall upstream earnings.
It is not known whether Zakaria intends to retain FGV’s comprehensive five-year transformation programme which had been spearheaded by Emir.
Recently, Emir had been in the midst of executing a major transformation programme within FGV, which involved major cost-cutting initiatives, as well as the renegotiation of thousands of contracts with vendors and suppliers.
It is worth noting that the cost-cutting efforts did not come at the expense of its 48,000-strong workforce. In a recent town hall meeting, Emir personally assured FGV staff that the company was not planning retrenchments.
According to internal figures, the company is planning to aggressively grow its revenue base to more than RM50bil per year by 2020. In comparison, FGV’s revenue amounted to RM15.7bil in FY15.
Zakaria was appointed as the head of the downstream cluster on Jan 1, 2014. He holds a degree in economics from Universiti Sains Malaysia.
He was appointed as CEO of Delima Oil Products Sdn Bhd before he assumed his position as head of the downstream cluster of FGV. He is also a director of several companies within the FGV group.