Value Creation Is The Bedrock Of Our Business ANNUAL INTEGRATED REPORT 2022 59 Group Business Review In 2022, we registered a higher sales volume in the oil & fats segment of 2% to 0.40 million MT, contributed by our competitive pricing strategy and the impressive growth of packed product volumes as we expanded our distribution network into new markets in Cambodia, Vietnam and North America. The decline in CPO prices towards the end of 2022 helped to improve the sales volume as well. Based on independent market research conducted in 2022, our flagship brand, Saji, continued to be the most trusted brand in the cooking oil category as well as the Fastest Growing Brand of the decade. Our market share for refined palm cooking oil increased to 45.7% from 42.1% previously, while, Seri Pelangi also made improvements in its market share for the margarine category, standing at 43.9% from 41.3% in 2021. We commercialised five new SKUs during the year, including Saji 3 Kg Cooking Oil, Saji Beras Basmathi & Aroma, Adela Tub with Sunflower Oil and Non-hydrogenated Margarine. The sales volume for the biodiesel segment has also increased significantly by 30% to 77,479 MT from the surge in demand as the economy returned to normalcy. During the year, the Division actively focused on high-margin product portfolios in the oils & fats and oleochemical segments while driving operational efficiency through various inventory management strategies to cushion our margins from the impact of supply chain disruptions. Outlook The outlook for the plantation industry is driven by global demand for agricultural commodities which is expected to heighten over the coming years as the population and incomes grow, thereby increasing demand for food, feed, and bioenergy. However, the industry also faces challenges such as climate change, resource constraints, and shifting consumer preferences for sustainable and responsible products. Looking ahead, FGV’s Upstream Division has well-defined targets and strategies that it aims to achieve in 2023 covering improvements in FFB yield, labour strategy, mechanisation, replanting and sustainability. In implementing the 25:23 (Yield:OER) project, we target a yield improvement of around 18% in 2023 by monitoring crop harvesting and mill efficiency at our estates, ensuring planting material is suitable for the respective planting sites, reducing pest and disease damage as well as implementing Good Agricultural Practices. We will also focus on maximising mill throughput to more than 95% by strengthening preventive maintenance programmes and replacing machines with new technology. Maximising oil recovery by increasing the recovery of oil in sludge collection pits and installing laminar tanks to improve the skimming of oil from Empty Fruit Bunch (EFB) juice will also help to improve oil yield. In terms of labour, we will expand our recruitment hubs with the aim of achieving 110% worker strength in 2023. In addition to continuously improving living standards for our workers as stipulated in the regulations, we will be allocating an additional RM121 million for upgrading purposes. We will also embarking further on mechanisation initiatives with the aim of improving the man-to-land ratio from 1:12 to 1:15 in the future. In strengthening our mechanisation efforts, we plan to take over an additional 20,000 Ha of external contract transport area for MACT and expand MAIC in hilly FFB areas with power barrows for FFB evacuation. The plan is to expand MAIC to an area of 104,244 Ha within a six-year spread and MACT to an area of 98,054 Ha within a five-year spread. We will also be accelerating replanting to correct the age profile of our plantations with a target to replant around 20,000 Ha. We expect the age profile of our trees to be 10.2 years by 2025. DOWNSTREAM Overview FGV’s Downstream Division is primarily involved in the refining and manufacturing of palm-based food products and oleochemical operations. We offer a range of products in categories such as cooking oil, margarine, creamer, coconut milk and rice. We are a market leader in the palm cooking oil and margarine segments through our flagship brands; Saji and Seri Pelangi. Our operations are strategically located across Malaysia and in the US and we leverage the direct access we have with the Upstream Division to obtain our palm oil supply. 2021 2020 2022 0.40 0.39 0.35 2021 2020 77.48 2022 59.62 59.08 Biodiesel Sales Volume (000 MT) Oils & Fats Sales Volume (Million MT) Saji Cooking Oil Market Share 45.7% 2021: 42.1% Seri Pelangi Margarine Market Share 43.9% 2021: 41.3%
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