61 ANNUAL INTEGRATED REPORT 2021 ADDITIONAL INFORMATION HOW WE ARE GOVERNED REINFORCING SUSTAINABILITY Downstream margins for 2021 were also pressured by the increase in CPO prices. However, the heightened demand in oleochemical by-products such as glycerine and esthers, to meet growing demand for detergents, cleaning products and sanitisers, steered us towards commendable performance. This was accompanied by higher than forecasted cost savings of RM15.66 million from the segment’s successful Loss Elimination programme in 2021. Furthermore, as our food products are considered essential staple items, they benefited from the surge in consumer demand catalysed by the rising trend of cooking at home during the year’s lockdown and restricted movement phases. This helped make up for the loss in business from the HORECA (Hotel/Restaurant/Café) market segment where businesses were impacted by prolonged closures. As a result, even hampered by soaring costs, Downstream delivered a commendable PBZT of RM105 million for the year. Another key achievement was the successful development of seven new product lines in 2021. These encompass three new animal feed pellet formulation, high IV olein, PMF, the improved healthier recipe of Adela margarine spread and pastry margarine. We were also proud to receive several awards during the year which reflects a growing culture of integrity and accountability among our workforce, attributed to inculcation of FGV’s PRIDE core values. Moving forward, we are mindful that responding to customer needs will be critical to success. A greater focus on product expansion is in the pipeline as we continue to explore affordable health-focused benefits for our food products in line with new lifestyle demands for healthier food options. Most crucial however, we will be escalating responsibility in meeting sustainability expectations and engaging with industry decision makers to positively respond to recent global market posturings such as the intentions to phase out palm oil imports from Indonesia and Malaysia by 2030. The two key initiatives being undertaken at this juncture are the FGV net-zero value chain GHG emission and the Waste Mapping. 0.36 78.67 2019 2020 2021 2019 2020 2021 0.35 59.08 0.39 59.62 Oils and Fats Sales Volume (Million MT) Biodiesel Sales Volume (000 MT) RESEARCH & DEVELOPMENT Current Strengths • Owns one of the largest oil palm research facility in the region • Produces FGV Yangambi ML161, an award winning oil palm germinated seeds with 43% market share • Leading fertiliser manufacturer in the country with 700,000 MT annual production capacity Where challenges abound, FGV’s R&D Division is a resource centre that helps propose innovative solutions for continued growth and expansion. The commercialisation of premium oil palm planting materials and fertilisers have become important revenue streams. The FGV Innovation Centre in Bandar Enstek, Negeri Sembilan, focuses on the development of oil palm planting materials and other high value planting materials through tissue culture. Our fertiliser business, incorporated in 1975, has evolved into a distinctive and competitive compound fertiliser producer in the region, able to deliver various product range to suit customers’ requirements. Customers are offered flagship fertiliser brands as well as customised formulations. R&D is driving the FFB Yield and OER Improvement Project for FGV and FELDA Group through mechanisation and digitalisation technologies in achieving OER of 23% and FFB yield of 25 tonnes/ Ha. The achievement in the Model Mill in Maokil is on track and will be replicated in all mills. R&D works to modernise FGV’s plantation and mills through technology. R&D efforts are being expanded on sustainability research such as renewable energy; and research on ways to minimise climate change impacts through planting material with increased drought tolerance, innovative irrigation and slow release fertiliser. Beyond this, the segment spearheads FGV’s readiness for Industrial Revolution 4 (IR4.0) capabilities by establishing estate productivity tracking and monitoring using IoT, implementing Big Data analytics for yield forecasting and weed management via drone aerial spraying. In 2021, we have developed five food formulation for FGV Delima Oil Products. For non-food, R&D has conducted research in the development of Palm Kernel Expeller (PKE) based product for animal feed and new formulation to enhance dairy production.
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