Value Creation Is The Bedrock Of Our Business 60 FGV HOLDINGS BERHAD Outlook Both challenges and opportunities exist in the oils & fats business as a result of competition from alternative oils, consumers becoming more health and sustainability conscious amid rising populations and increased demand overall for processed foods. While the Malaysian economy is expected to record moderate growth in 2023, we expect it to be a tough year for the Fast-Moving Consumer Goods (FMCG) sector in Malaysia as inflationary pressures persist. Nevertheless, we will persevere with our market growth and product expansion initiatives, as well as operational excellence initiatives. This will include expanding our distribution networks by pursuing a regional distribution model in the Northern, Southern and Central areas of Peninsular Malaysia. We will also be introducing new cooking oil and premium cooking oil products. Globally, we will expand further into the Middle East and North Africa, as well as into North America, in line with the demand outlook and healthy margins in these markets. Operationally, we have determined a range of initiatives to drive better operational efficiency and increase operational cost savings to mitigate the ever-increasing costs of raw materials and utilities. REASEARCH & DEVELOPMENT Overview FGV’s R&D arm continues to be an important component of the Group’s operations as it provides us with innovations and new technologies that help to improve productivity and efficiency. The secondary outcome of its activities is the commercialisation of the various applications and products it has created which add value to the Group from a revenue perspective. We own one of the largest oil palm research facilities in the region and we produce Yangambi ML161, an award-winning planting material that holds over 40% of domestic seed market share. Additionally, we have a fertiliser manufacturing capacity of 700,000 MT annually. The R&D Division’s products, which include Yangambi ML161 seeds, fertiliser and rat bait experienced a surge in demand in 2022, resulting in higher volumes sold. This boost in demand was supported by strong CPO prices and the plantation industry’s shift towards more frequent and sustainable replanting activities. For instance, our fertiliser sales saw significant growth with a total of 0.72 million MT sold as we secured additional contracts in 2022. Group Business Review In line with the broadening of FGV’s focus, the R&D Division’s efforts are being extended to support product development across the value chain and provide solutions for operational improvements and increased productivity. Our R&D focus areas include estate and mill modernisation and mechanisation, high-quality planting materials, crop diversification and the development of food and non-food products. Additionally, we have undertaken research initiatives aimed at supporting FGV’s sustainability agenda, such as renewable energy, drought-tolerant planting materials, irrigation and slow-release fertilisers. To accelerate our research initiatives, we have formed partnerships with educational institutions with the objective of providing upskilling and reskilling training programmes for estate operations. 21.30 15.00 25.03 2021 2020 2022 Yangambi Seed Sales Volume (Million units) Fertiliser Sales Volume (Million MT) Rat Bait Sales Volume (Million boxes) 0.64 2021 0.72 2022 0.42 2020 0.30 0.29 0.33 2021 2020 2022
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