CEO aims to elevate investor confidence

Interview with FGV CEO Datuk Zakaria Arshad at Menara Felda kl

THE affable Datuk Zakaria Arshad (pic) doesn’t strike you as having had a tiring day. But just hours before, he was on a flight from London which had been diverted to Sri Lanka to cater to a medical emergency on board. 

As a result, Zakaria only reached his home at 4am, only to be back out in the city for a 9am meeting. 

When StarBizWeek had caught up with him at 3pm yesterday at the Felda headquarters, he had gone through a few more meetings and just returned from his Friday prayers. 

But for the next two hours Zakaria, the four-month-old group president and CEO of Felda Global Ventures Holdings Bhd (FGV) sought to explain in as much detail as possible why he’s seeking to prove that his company can change its fortunes simply from getting back to the basics. 

Here are excerpts of the exclusive interview:

Q: Having been in charge of FGV over the past four months, how would you differentiate yourself from your predecessors? How would you sum up your long-term transformation plan for FGV?

A: I have laid all these in my transition plan where the end in mind is to enable FGV to undertake future growth agendas more efficiently and effectively. This will enable us to maximise profitability from our core operations in a sustainable manner and help elevate investor confidence towards FGV’s shares.

I aspire to ensure that FGV will be in business for the next 100 years. We need to push ourselves and build further on our success stories. FGV is blessed with having a fully integrated operations spanning across the value chain from the upstream sector to other processes involving downstream and support services.

We need to capitalise on this, and our unique smallholders supply base. We need to realise the full potential of our internal capabilities, ensure profitable growth by sweating existing assets, readjusting investments and getting rid of operational complexities.

Since taking over as CEO, what has been the single biggest challenge for you so far in the group?

My greatest challenge will be coming from the aspects of managing organisational behaviour, particularly in the area of talent management. It is critical we enhance and elevate our existing internal capabilities, knowledge and skills to remain competitive and cope with the fast-changing business environment.

There has been numerous land bank acquisitions over the past three years by the group to the tune of billions of ringgit. However, there was minimal improvement in overall earnings since. Do you believe this was the right move?

I believe whenever an acquisition was proposed, a due diligence study was conducted and the decision made was based on the best interest of the company. Nevertheless, we will re-evaluate the assets and sweat the existing assets the best that we can.

You have worked within Felda’s group of companies throughout your career. Having been on the ground and having closely worked with the settlers, would you say that FGV has an image problem presently? If so, how do you intend to fix it?

The approach will be different to suit the changing social environment now that I am CEO. I am a settler’s son and I have an advantage there. Having grown up among the settlers, I understand the ways and manner that will enable FGV to get close to the settler community again. So far, the response from the settlers is positive.

Four years ago, FGV was promoted as a Malaysian player with global aspirations. However, after selling off the Canadian subsidiary as well as the aborted Zhong Ling acquisition, is the “global” in Felda Global just a name?

The move was purely a business decision. M&As (mergers and acquisitions) are not our priorities now. Our focus remains to optimise capabilities of existing assets. Current market volatility requires us to be prudent and cautious. We will continue to grow organically and evaluate the market closely for further business opportunities.

This does not mean that FGV does not focus on the expansion of operations abroad. It is just a matter of priority and getting the best deal with the highest shareholder return. The international market is important for FGV’s sustainability of operations; just at the moment our focus is to advance existing assets.

With the Eagle High Plantations (EHP) deal coming to a conclusion, can you confirm that FGV will no longer have to participate in the transaction?

We would like to reiterate that this year, our focus is not on M&A. As far as EHP acquisition is concerned, FGV is no longer involved in that discussion. All our decisions are done in the best interests of our shareholders.

Do you believe that the EHP issue over the past year had a major impact on investors’ perception towards the company as well as its share price?

There’s no denying that this issue affects FGV shares. We are placing our new strategic blueprint and enhancing the engagement with key investors. With it, I believe investors will return their confidence to make investments.

The Tradewinds Group is said to be keen on a partnership via an investment into FGV. Can you comment on this?

We are not aware of any potential suitors either from Tradewinds or other companies. However, any interest is a testament that FGV is a world-class company with a positive outlook. FGV remains committed to its transition plans to focus on improving efficiencies, cost rationalisation measures and enhancing the full potential of its existing assets.

Are you maintaining FGV’s dividend commitment towards your shareholders? Some have expressed reservations over the group’s decline in earnings last year. What is your message to them?

FGV this year is focused on improving profitability to ensure good returns to investors through dividends. FGV is committed to a policy to allocate 50% of profits to dividends.