56 FGV HOLDINGS BERHAD ABOUT FGV MANAGEMENT DISCUSSION & ANALYSIS VALUE CREATION Plantation Sector Revenue 2020 : RM11,573 million PBZT 2020 : RM402 million RM16,920 million RM1,602 million FY2021 OVERVIEW The year under review continued to be challenged by the impacts of pandemic disruptions that gave rise to a shortage of manpower, lowered demand and consumption, and heightened production costs. The intermittent lockdowns also led to interruptions in logistic and harvesting, which caused deterioration in yield and lesser production. Though challenges abound, FGV’s Plantation Sector registered a higher profit of RM1.60 billion in FY2021 compared to RM401.99 million recorded last year. Average CPO Price (RM/MT) Average PK Price (RM/MT) 2019 2020 2021 2019 2020 2021 2,021 1,225 2,675 1,558 3,671 2,844 The increase in profit was mainly attributable to the higher average CPO price realised of RM3,671/MT against RM2,675/MT registered in FY2020. The performance of the Sector was also boosted by the lower fair value charge in LLA of RM3.98 million against RM158.49 million registered in previous year. Lower impairment loss of RM82.75 million compared to RM215.83 million recognised in previous year and better operating margin in its fertiliser and rubber segments in FY2021 have further improved the Sector’s result. The focus during the year was for Upstream operations to record higher productivity and lower costs by improving yields through replanting and mechanisation initiatives. A total of 13,127 Ha of landbank was felled and 2,815 Ha had been replanted to improve our oil palm age profile. However, like other plantation companies, FGV was also impacted by industry challenges that hampered the planned implementation of these improvement initiatives. The Group believes it is vital to grow higher value-added business, focusing on the expansion of the Downstream Division. Hence, during the year, we successfully completed the development of new products in our feedstock, premium oil, and palm-based food products. Group Business Review Plantation Standing: (from left) • Mohd Aris Omar – Head, Plantation Engineering • Zulkifli Othman – Head, Downstream Division and Business Development & Strategy and Chief Executive Officer, Delima Oil Products Sdn Bhd & FGV Refineries Sdn Bhd • Norli Manaf – Chief Executive Officer, FGV Rubber Industries Sdn Bhd • Abdul Latib Derassit – Head, Renewable Energy Division • Suhaidi Hamzah – Head, Research & Development Division • Zarif Zainul – Head, Field Workforce & Settlers Engagement • Abdul Malik Sekak – Head, Mill & Chief Executive Officer, FGV Palm Industries Sdn Bhd • Rahimi Hissan Wahid – Head, Estate & Chief Executive Officer, FGV Plantations (Malaysia) Sdn Bhd • Johari Ismail – Chief Executive Officer, FGV Security Services Sdn Bhd Sitting: (from left) • Zur’ain Madon – Head, Operational Excellence Division • Jasni Muhamad – Head, Marketing & Trading Division • Mohd Sarian Md. Sahid – Group Divisional Director, Plantation Sector & Head, Upstream Division • Mohamad Fauzi Hassan – Officer-In-Charge, Chief Human Resources Officer & Head, HR Plantation Sector • Mazatul Aishah Aziz – Head, Corporate Affairs
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