FGV Annual Integrated Report 2019

60 FGV HOLDINGS BERHAD SUGAR SECTOR INTRODUCTION MSM Malaysia Holdings Berhad (MSM) is the world’s eighth-largest sugar refiner by capacity and Malaysia’s top sugar producer with a 61% domestic market share. MSM Group now has a total annual production capacity of 2.25 million MT from its three refineries in Johor, Perlis and Penang, with a production capacity of 1 million MT, 0.20 million MT and 1.05 million MT, respectively. BUSINESS PERFORMANCE Value-Added Sugar Products • Started to export value-added sugar products such as sugar syrup and premixed sugar to the Asian market. Product Certifications • Our refineries conform to Halal, Malaysian Standard (MS), QMS ISO 9001:2015, Kosher, FSSC22000, ISO22000, Hazard Analysis and Critical Control Points (HACCP) and Good Manufacturing Practice (GMP) certifications, ensuring the safety and quality of our sugar products. OUTLOOK & PROSPECTS FOR SUGAR SECTOR • Began the installation of Phase 1 of a biomass boiler in MSM Johor to reduce its energy bill. • Implementing the ‘Just-In-Time’ mechanism to optimise raw sugar stocks and external warehouse space. • Ongoing research and development efforts to produce food and non-food sugar-related products such as low-calorie sucralose, mud cake and molasses. SUGAR KEY HIGHLIGHTS The Sugar Sector continues to take further initiatives to add value to our Manufactured Capital. These include: 0.88 Million MT 0.08 Million MT 1.07 Million MT 0.86 Million MT RAW SUGAR IMPORTS A decrease in raw sugar purchases in 2019 was attributed to the high raw sugar stock of 278,111 MT that was carried over from 2018 to 2019. EXPORT SALES VOLUME Export sales contributed marginally to the total revenue of MSM. The surplus of refined sugar in the world market in 2019 negatively impacted the export sales volume. In addition, the tight spread between white sugar and raw sugar prices affected the competitiveness of our pricing compared to other refiners, especially those in Thailand. REFINED SUGAR PRODUCTION VOLUME Refined sugar production volume increased compared to 2018 following the commercialisation of MSM Johor on 1 April 2019. DOMESTIC SALES VOLUME Domestic sales volume recorded a slight increase of 5% year-on-year. MANAGEMENT DISCUSSION & ANALYSIS STATEMENTS AND ANALYSIS