FGV Annual Report 2013

This includes, the most advanced vegetable oil terminals in major ports of Malaysia and ranked as the largest bulking edible oil facilities in the world. In addition, we are also engaged into production of fertilisers of which we are the market leader in producing and distributing more than 500,000 tonnes of high quality fertilisers per annum. We are also embarking on the fertiliser expansion mode by adding a new fertiliser plant in Kuantan Port, Pahang with an additional capacity of approximately 300,000 tonnes per annum, expected commissioning by Q3 2014. OtherMLOcompaniesengage inprovisionof security services, travel andhospitality, engineering, project management and property development as well as Information and Communication Technology (ICT) services. For 2013, R&D and MLO posted a profit of RM186.8 million, compared to RM343.3 million achieved by the previous year. The 45.6 percent decline was attributed primarily due to decrease in R&D income and lower fertiliser margins due to lower average selling price and lower sales volume. R&D and MLO’s financial performance is a reflection of the challenging environment in 2013. In a very competitive market, R&D and MLO’s performance was impacted by fluctuations in the prices of raw materials, underpinned by lower and volatility of the CPO prices, unpredictable weather condition, increase in electricity tariff rates and diesel prices coupled with the weakening Ringgit against the US Dollar. Moving forward, R&D and MLO has identified a raft of revenue and cost initiatives to improve its performance for the coming financial year. Greater efforts will be channelled to expand its fertiliser market base, targeting private and government-linked companies (GLCs) operating plantations in Malaysia, expanding export sales to the ASEAN region, adopting a direct sales approach to FELDA second generations of settlers and stepping up sales to Malaysian-owned plantations operating overseas. In transportation services, MLO will focus on external high- value sectors such as oil and gas, defence and security, energy and utilities, automotive and manufacturing, to cite a few examples. Among cost initiatives, MLO will be establishing partnerships with local fertiliser companies to achieve greater economies of scale. It will also explore new sources of raw materials from suppliers in the Middle East, Pakistan and Vietnam. MLO is also planning to implement a more comprehensive ICT support system that will contribute towards overall cost control. CEO’s Review Ulasan Ketua Pegawai Eksekutif Research & Development (R&D), Manufacturing, Logistics and Others (MLO) penyelidikan & pembangunan, pembuatan, logistik dan lain-lain Felda Global Ventures Holdings Berhad 40