Value Creation Is The Bedrock Of Our Business ANNUAL INTEGRATED REPORT 2022 61 Outlook Moving forward, the R&D Division will continue to focus on ongoing initiatives, several of which have the potential to be commercialised, as well as adopting advanced technology to address labour shortages. The overarching aim is to maximise profitability and to generate new revenue streams through agriproducts, high-value crops and consumer products beyond oils & fats. The Division will also focus on introducing advanced technologies to address labour shortages, adapt automation and incorporate green and sustainable processes into our operations. Driven by FGV’s three-year strategic plan that will take us to 2025, we are also committed to improve FGV’s overall productivity through the 25:23 (Yield:OER) initiative where we target FFB yield of 25 MT per Ha and 23% OER for all mills by 2026. MARKETING & TRADING Overview In the Marketing & Trading Division, FGV’s sales and trading of bulk oils business is one of the leading revenue contributors to the Plantation Sector. We are a one-stop centre for the sale of bulk products, providing end-to-end supply chain services and having an experienced team of traders that sell and trade over 2 million MT of CPO annually. We are experienced in managing shipments to an extensive list of ports globally in addition to facilitating ground transport for local buyers. The Division recorded excellent sales of 3.83 million MT across all its products on the back of elevated commodity prices as a result of global concerns regarding supply in 2022. Although there was further volatility during the year, especially with the onset of the Russia-Ukraine conflict and Indonesia’s policy changes, a higher trading margin was achieved as a result of a cohesive sales and trading strategy, and supply chain management. Outlook Trading in palm oil goods is expected to experience growth in the coming years due to increasing demand as populations grow. However, evolving government policies in response to food security needs or demand and supply concerns can pose a risk going forward. Consumers, who are the end users in the value chain, are also demanding more sustainable and eco-friendly products and are concerned about whether the products they buy are produced in an environmentally responsible manner. To navigate this landscape, the Marketing & Trading Division will continue to strengthen its value chain and supply chain spectrum, as well as exploring capacity growth in destination markets. We will also continue to focus on enhancing our traceability practices to meet the market’s growing concerns regarding sustainability. RUBBER Overview Our Rubber Division is a key player in Malaysia with 50 years of experience in the rubber business and a market share of about 18% backed by a production volume of 90,000 MT to 125,000 MT per annum. We are one of the top Technical Standard Rubber producers with five rubber processing facilities and one Latex Concentrate plant across ASEAN, as well as the sole producer of Green Rubber products in Malaysia. Group Business Review Our major customers are tyre manufacturers and we also sell spot to traders. The Division has a total of six factories with four in Malaysia, one in Thailand and one in Cambodia, with a total combined installed capacity of 236,000 MT per annum. Our rubber business is currently diversifying into the production of Green Rubber materials. Green Rubber is a modified Natural Rubber which has properties that can replace Synthetic Rubber in all types of tyres and engineering applications. This is in line with FGV’s ambition of advancing into sustainable businesses and helps to reduce the usage of synthetic rubber, which is petroleum-based material. To boost this business, we are currently undertaking R&D processes for product quality improvements. Outlook The outlook for the Rubber business is generally positive, as the demand for rubber continues to grow in a variety of industries, including automotive and healthcare. However, several headwinds remain, including the Russia-Ukraine conflict, the global economic slowdown and the shortage of semiconductors, which could dampen the recovery in the automotive and tyre industries, the largest consumers of rubber. As such, we have strategic initiatives in place that prioritise operational excellence, cost control, risk management, as well as market expansion through new collaborations and potential joint ventures. RENEWABLE ENERGY Overview The Renewable Energy Division is the key driver of the Group’s waste-to-wealth business whereby biomass from our mills is used to produce biogas fuel for Feed-in-Tariff (FiT), local and rural grid connections, and Bio-Compressed Natural Gas (Bio-CNG) plant. As part of the FGV Group, we are the world’s only palm oil plantation company with 28 biogas power plants and the first in the world to develop a commercial-scale palm-based Bio-CNG plant via a collaboration with the Malaysian Palm Oil Board. 104,333 117,246 149,253 Total Carbon Emissions Avoidance (MT CO2e) 2020 2021 2022
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