Felda Global completes sale of Canadian unit for RM567mil

KUALA LUMPUR: Felda Global Ventures (FGV) Holdings Bhd has completed the sale of its loss-making Canadian subsidiary, and received the cash purchase price of C$172.7mil (RM567.1mil).

The subsidiary, Twin Rivers Technologies Entreprises De Transformation De Graines Oléagineuses Du Québec Inc (TRT-ETGO) was sold to Canadian grain and oilseeds marketer and handler, Viterra Inc as part of FGV’s five-year transformation strategy.

CIMB Research plantations analyst Ivy Ng said the research house was positive on the disposal as the plant was loss-making and several attempts to turn around the group had not been successful.

TRT-ETGO had generated a total net loss of C$114.4mil (RM366mil) over the past three years.

She said the sale would help boost FGV’s second half earnings by RM86.7mil, or 2.3sen per share, and improve future earnings of the group.

“This will help to partially offset the current weak CPO prices,” she said in a note.

In a statement yesterday, FGV said the sale had been completed following the fulfilment of all the deliveries and conditions set out in the share purchase agreement (SPA) signed on Aug 27.

“The divestment is expected to improve FGV’s profitability position in line with FGV’s long term commitment to its stakeholders and shareholders.

Kenanga Research said it expected FGV’s downstream segment margins to turn positive but said this will only impact earnings from FY16 onwards.

Public Investment Bank Research, when the deal was first announced, lauded the move, saying it would help reduce the group’s downstream losses.

It however lowered its earnings forecasts for FY15-17 by between 16% and 24% after revising its CPO price forecast for the period.