Value Creation Is The Bedrock Of Our Business ANNUAL INTEGRATED REPORT 2022 51 Group Financial Review PROCUREMENT FGV has become more vigilant in procurement spending and has introduced measures to minimise leakages since 2021, resulting in improved processes and negotiation strategies. The Group continued with this effort in 2022 and exceeded the 2022 stretch target by achieving 131% or RM157.27 million in savings, despite the COVID-19 pandemic that reduced procurement activities. Moving forward, we will continue to rigorously monitor our procurement expenditures as part of our approach to lower our operating costs. OUTLOOK Looking ahead, from a global perspective, the balance of risks is tilted to the downside as geopolitical tensions and elevated inflation weigh on growth prospects. Domestically, the Malaysian economy is expected to record moderate growth of 4.5% in 2023, supported by domestic demand. However, inflation is expected to remain elevated and exports are expected to slow down. In addition, CPO prices are forecaste to remain high as a result of the tight labour market and the prolonged Russia-Ukraine conflict, which could benefit FGV. Overall, the Group will continue to seek ways to improve its operational efficiency and will implement cost optimisation initiatives to manage rising costs across all Sectors. The Plantation Sector, in particular, will continue to mechanise and drive its replanting programme to ensure higher productivity in the estates and mills. We also anticipate that revenue will start flowing in from the new focus area in the next few years. On the labour practices front, we expect our Withhold Release Order (WRO) suspension to be modified in due course, having initiated all the necessary steps to address the matter and expect to submit a final report to the United States (US) Customs and Border Protection (CBP) in the near future. • Procurement Process Digitalisation We implemented several eProcurement system improvements, process governance and control, and database integration within the existing Enterprise Resource Planning (ERP) system. This digitalisation initiative was to enable automation, improve turnaround time, enhance data quality and increase process transparency, which helps streamline the end-to-end procurement paperless cycle. OPERATIONAL EXCELLENCE THE REALISED SAVINGS OF RM157.27 MILLION REPRESENTED A COST REDUCTION OF 16% COMPARED TO THE BUDGET. FGV Shared Service Centre Sdn Bhd implemented Finance Business Process Re-Engineering for estates and regions, which aims to standardise and digitalise invoice and payment processing. This will help to accelerate the closing process, allowing subsidiaries to streamline their financial operations and achieve greater efficiency, accuracy and consistency in financial reporting. In addition, the scope of intelligent Robotic Process Automation (iRPA) is expanded to include medical invoice verification and Personnel Administration processing, seamlessly integrating these tasks to improve the efficiency and productivity of the finance shared services function. The iRPA process aims to reduce repetitive tasks to increase operational capabilities and create a more efficient workflow. FINANCIAL OPERATIONAL HIGHLIGHTS
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