FGV Annual Integrated Report 2019

54 FGV HOLDINGS BERHAD OVERVIEW The Group’s goal is to consistently and sustainably add value to our Manufactured Capital, in line with our strategic thrusts. In 2019, we maximised the output from our properties, mills, refineries and other equipment to the best of our ability and within the capability and capacity of the other Capitals such as Human and Financial Capitals. The Group has created value for our stakeholders and will continue to grow Manufactured Capital while managing the inherent risks and opportunities. PLANTATION SECTOR BUSINESS PERFORMANCE UPSTREAM Our mills process fresh fruit bunches (FFB) into crude palm oil (CPO). Moving along the value chain, we operate refineries that support our Downstream business that converts CPO into palm oil-based products such as oils and fats, fast-moving consumer goods (FMCG) and oleochemical derivatives. INTRODUCTION The number of mills we operated in 2019 remained at 68. Out of this total, 55 mills are located in Peninsular Malaysia, 11 mills are in Sabah and the remaining two mills in Sarawak. In 2019, the total processing capacity was 3,251 MT per hour, which was the same as the previous year. 14.90 Million MT 20.61% 3.07 Million MT FFB PROCESSED In terms of FFB processed, there was an 8% increase in 2019 with 14.90 million MT processed, driven by a 6% increase in FFB production volume, with 30% of total FFB coming from our own estates. The remaining 44% and 26% were sourced from Federal Land Development Authority (FELDA) settlers and third parties, respectively. CPO PRODUCTION As a result of the higher amount of FFB processed, our CPO production in 2019 rose to 3.07 million MT compared to 2.82 million MT in 2018. Consequently, the average CPO cost ex-mill was RM1,503 per MT, a 17% reduction from 2018. FGV was able to reduce production cost due to operational improvements such as implementation of good agricultural practices (GAP), and better crop recovery. OIL EXTRACTION RATE Our oil extraction rate (OER) maintained its upward trend, improving to 20.61% in 2019 due to initiatives taken to improve FFB quality and closely monitor mill process parameters. In addition, we controlled oil losses, maintaining the average at 1.40%, which was below the limit of 2.00%. Our kernel extraction rate (KER) reduced slightly by 0.03% to 5.20% due to the difficulty of evacuating loose fruits during the wet weather seasons. FGV’s OER and KER continue to exceed the nationwide average of 20.21% and 4.98%, respectively. SDGs: Strategic Thrusts: Material Matter: We align our Manufactured Capital with: EP MANAGEMENT DISCUSSION & ANALYSIS STATEMENTS AND ANALYSIS