The week that was

  • Corporate News
  • Friday, 01 May 2020

MCO road block

Easing MCO

Since Wednesday, business that have been allowed to operate during the movement control order (MCO) period can now do so at full capacity.

This was announced on Tuesday by Senior Minister Datuk Azmin Ali, who is also the International Trade and Industry Minister.

On Wednesday, further easing was announced by the government as the number of new Covid-19 cases ebbed.

The more relaxed restrictions on the economic sector were welcome by the business community and the public at large.

For many, the MCO, while necessary to curb the spread of the deadly Covid-19, is also choking their economic life blood.

On Monday, a survey by a grouping of small businesses revealed that as many as 300,000 small and medium size enterprises (SMEs) risked getting wiped out due to the lack of business since the MCO was introduced on March 18.

US economy shrinks in Q1

The US gross domestic product (GDP) contracted 4.8% in the first quarter ended March 31.

That is the first decline since 2014, and the worst three-month contraction since 2008, when the country went into a deep recession.

The latest quarterly US economic report showed the extent of the damages inflicted by the coronavirus during its initial outbreak, but the worst is yet to come.

Layoffs and business closings in the world’s largest economy began in earnest towards end of March and became widespread in April.

The US is now the highest Covid-19 infected country in the world with more than a million reported cases and over 60,000 deaths.

There are talks about the possibility of easing lockdown restrictions from May onwards, but the damage is done.

Economists expect the GDP figures from the current quarter, which will capture the shutdown’s impact on the US economy more fully, to show deeper contraction compared with the first quarter.

FGV flags significant decline in output

FGV Holdings Bhd, the largest crude palm oil (CPO) producer in the country, has forecast a significant drop in output this year due to manpower curbs at its plantations.

This came as the benchmark price of CPO hovered at around RM2,000 a ton compared with at above RM3,000 a ton in early January.

The maker of the Saji brand cooking oil also said its downstream operations will be affected by slower consumer demand and reduced export business.

FGV chief executive officer Datuk Haris Fadzilah Hassan, in the group’s latest annual report released on Tuesday, the MCO has affected the group’s performance this year, which has curtailed its workforce strength, shuttered businesses and limited movement of consumers.

In 2019, FGV said fresh fruit bunches (FFB) production climbed 5.6% to 4.45 million tonnes, while CPO output rose to 3.07 million tonnes from 2.82 million tonnes previously.

FGV has a total plantation landbank of 439,230 hectares in Malaysia and Indonesia. This includes 351,000 hectares under the land lease agreement with Felda.

The total palm oil planted hectarage in Malaysia is 338,437 hectares.

Oil plunge hits Sapura Energy

Sapura Energy Bhd posted a RM4.2bil net loss in the three months ended Jan 31 after it made RM3.3bil in asset writedowns.

The impairments, it said on Wednesday, were “necessary” due to the prolonged recovery expected in the oil and gas industry.

The massive loss in the last quarter pulled the company RM4.56bil deep into the red for the full year (FY20) on turnover of RM6.45bil.

The group’s current orderbook stands at RM13.5bil.

Since January, the price of crude oil had plunged from above US$60 a barrel with the benchmark Brent crude oil futures trading at around US$20 a barrel earlier this week.

The steep price decline have encouraged key producers to reduce output to catch up with plunging demand for jet fuel and gasoline as billions of people worldwide stay at home due to the pandemic.

President and group CEO Tan Sri Shahril Shamsuddin said yesterday the company was not expected to make further impairment in FY21.

Earlier in the week, it was reported that Sapura Energy’s top management has agreed to take a 50% pay cut.

The austerity measures also included readjustment of employees’ salaries between five to 45% across the board effective after Ramadhan; and a reduction in the size of workforce.

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