FGV Annual Integrated Report 2019

24 FGV HOLDINGS BERHAD EXECUTING OUR BUSINESS STRATEGY FOR VALUE CREATION AND SUSTAINABLE GROWTH Malaysia is one of the very few economies with high and sustainable economic growth since 1957, the year of its independence. Malaysia has successfully diversified its agriculture and commodity-based economy to one that hosts robust manufacturing and services sectors. However, in today’s highly competitive global economy and like many other high middle-income economies, it is facing challenges that make its next leap into developed-nation status that much more difficult. There is a need for industries here to be more aggressive in shifting up the value chain of each factor of production and develop higher-value-added products. At FGV, we have always aligned ourselves with our country’s goal to become a developed economy and realise high growth. As the country’s per capita income and prosperity increase further, FGV’s income should rise in tandem. This cannot be achieved if we remain comfortable in our old segments that can only provide low wages to workers. We need to be in the right segments of the industries we operate in to achieve substantial growth. We plan to develop new earnings streams from the circular economy to create value and identify adjacencies to existing revenue streams. Aware of the inevitability of further escalations in production costs as our economy continues to push into tertiary sectors, we have no choice but to become more competitive. For this reason, FGV continues to focus on the implementation of our Business Plan 2019-2021 (BP21), which was formulated to help FGV emerge as one of the world’s leading integrated and sustainable agribusiness players. We have just concluded the first year of executing BP21 and have already seen tangible results. New value-added and business opportunities have helped us to add to our bottomline. To sustain our performance, we will continue with our four strategic thrusts, namely: 1 Operational Improvement 2 Products & Markets Penetration 3 New Growth Area 4 Financial & Capability Building To this end, the Group has formulated a Strategy Map to illustrate implementation at the Group and business levels. This Strategy Map is driven by the four strategic thrusts and supported by three key enablers. Our Strategy Map underscores the importance of operational integration for FGV to survive and thrive. Our strength in the management of plantation operations and processing facilities will continue to be enhanced by the development and implementation of productivity and cost-optimisation initiatives. Operating capabilities in other parts of the value chain that are closer to end-customers will be fine-tuned to speed up our response to market changes and enable higher returns for FGV’s shareholders. We need to widen our product offerings to end-consumers to entrench our presence in Malaysia and penetrate various export markets. Building on adjacent businesses such as intercropping and the circular economy that leverage our by-products will also help drive revenue. In most instances, the above require minimal start-up capital. To support our growth, we will enhance our trading and marketing capabilities, build stronger brand equity and enhance our research and product development abilities. Our existing supporting businesses will also play an important role in helping us reach our goal. As speed and efficiency in running our operations and in dealing with customers cannot be compromised, FGV continues to emphasise growth in its Logistics, Bulking and Technology businesses. This is to ensure our products and services are traceable and delivered to customers in the most timely and effective manner. Put together, this long-term strategy will take FGV to the next level. We know where FGV needs to go and will continue to execute our initiatives until we evolve into one of the world's leading integrated and sustainable agribusiness players. OUR BUSINESS PLAN VISION MISSION BUSINESS OBJECTIVES To be a global leader by: SUGAR World Premium Sugar Producer KEY ENABLERS HUMAN CAPITAL STRATEGIC THRUSTS OPERATIONAL IMPROVEMENT UNDERSTANDING OUR BUSINESS