Chemical Co of Malaysia exits fertiliser business
Published on: Friday, July 01, 2016
Kuala Lumpur: Chemical Co of Malaysia Bhd (CCM) has inked a RM83.5 million deal to divest its fertiliser plants in Sabah and Sarawak.CCM has disposed of its entire stakes in both CCM Agriculture Sdn Bhd and CCM Agriculture (Sabah) Sdn Bhd, as well as, certain trademarks relating to the Cock's Head brand to Hextar Fertilizers Group Sdn Bhd for RM48.55 million cash.CCM has also disposed of two parcels of land together with the buildings thereon in Bintulu, Sarawak to Hextar Synergy Sdn Bhd for RM35 million.
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In a statement Thursday, CCM Group Managing Director, Leonard Ariff Abdul Shatar, said the disposal exercise would allow the group to place greater attention on enhancing the business profitability of its pharmaceuticals and chemicals divisions.He said the fertilisers division had been facing tough challenges which saw a decline in its volume sold to all of its market segments. "Additionally, the prolonged negative market conditions, coupled with the expectation of bearish market outlook, had resulted in major customers, comprising oil palm plantation houses, trending down to cheaper fertilisers."The situation was further exacerbated by volatile crude palm oil (CPO) prices and high CPO inventory levels," he said.
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Leonard said the expected lower demand for ammonia-based fertilisers and continued financial losses incurred by the division since 2013 has led to the board to make a strategic decision to exit the fertiliser business.Stay up-to-date by following Daily Express’s Telegram channel.
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"This strategic move will help us jump-start initiatives to return to profitability and enhance the business viability of our divisions," he said. – Bernama
