Value Creation Is The Bedrock Of Our Business 66 FGV HOLDINGS BERHAD Group Business Review Apart from operational and sales strategies, we continue to invest in our people. The Human Resource Department has been rebranded to People & Culture to provide a clear expression of the Management’s appreciation for our people as an important resource and driving force of the Company. We also undertook two initiatives to boost employee morale, by implementing the minimum wage increase and hosting inaugural quarterly town hall meetings to improve communication between Management and all employees, keep everyone informed and updated on the Company’s directions and progress, as well as encourage feedback from our employees. Outlook Refined sugar consumption is expected to grow year-on-year. As the country’s economy recovers, we foresee an upward trend in 2023 towards pre-pandemic levels. We are focused on increasing market share through our regional presence and expanding our exports. MSM expects to export 30% of its total production, which will contribute to the growth of its regional market footprint from the present 8% to approximately 12% to 15% in the Asia Pacific region. Our plans also include expanding our Value-Added Products business of liquid sugar and premix into major markets such as China. In addition, our Sugar business is aligned with our direction towards integrating into the FMCG sector by going beyond sugar. MSM will strengthen its downstream value-added business by furthering research and development towards product diversification. Response Outcome Challenge NAVIGATING CHALLENGES Rising raw sugar NY11 and freight costs • Hedging NY11 based on MSM’s policy and budget • Revision of selling prices upward to maintain margins • Implementing a strategy to reduce freight costs • MSM recorded higher revenues in 2022 compared to 2021 due to the revision of prices and mitigation of high freight costs via long-term charters Low UF and yield in MSM Johor’s refinery operations • Intensifying focus on improving MSM Johor’s refinery’s UF in 2022 in terms of addressing production efficiencies and capabilities to ensure future sustainable performance • By May 2023, we expect to have two boilers in full operation, which will then allow us to increase production beyond its breakeven point Rising natural gas cost • Hedging the rising cost of natural gas with Brent-linked derivatives like options and futures contracts • The risk of rising energy prices was partly reduced with prudent hedging on Brent-linked derivatives contracts STRATEGY IN CREATING VALUE Increase the sustainability performance of our refineries Promote energy planning and green energy for sustainable operations Improve sales performance Improve market penetration through strategic partnerships, especially for the export segment Intensify digital transformation towards Industry 4.0 Cost optimisation and strategic capital management
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