FGV Annual Report 2014

Risks Crude palm oil (CPO) prices have fluctuated 32 percent from 2011 to 2014, reaching a five-year low of RM2,083 in October 2014. Sugar and rubber prices have also dropped, fluctuating 37 percent and 60 percent respectively over the same period. As CPO remains a core commodity for FGV, prolonged price depression, coupled with recent economic uncertainty, have significantly impacted its business. Growth plans beyond Malaysian shores were also hampered during the year 2014. Indonesia’s foreign ownership policy continued to be volatile. In early 2014, Indonesia had initially restricted foreign ownership up to 30 percent, but later on, dropped this limit clause – providing huge relief to major oil palm industry players. In addition to this, the political instability and recent disease outbreak caused FGV to rethink its expansion strategy to the African continent, while China has further intensified enforcement of its anti-monopoly law and increased protectionism measures. Opportunities To become globally integrated agri-business player, FGV needs to expand its landbank size considerably for crop cultivation. With uncertainty in policies and regulation of the targeted destination countries, FGV’s upstream business expansion mission was dampened. Notwithstanding this, FGV can and will remain an aggressive industrial player in the agri-business segment despite risks and uncertainties it is facing, as agro- commodities is a long term and attractive business. With Asia Pacific’s growing population and the emergence of a wealthier middle class, especially in China and India, this will continue to create increasing demand for FGV’s agricultural products. Moving forward, FGV will continue to embark on its sustainable growth road map as the optimistic consumption growth in these markets, especially in edible oil, oleochemicals, biodiesel, sugar, rubber and high-end innovative products of palm oil will continue to increase the demand for FGV agricultural products. Introduction Performance Highlights About FGV Reports Financial Statements Others Strategy and Value Creation Performance Review & Progress Foreword to Shareholders Annual General Meeting Annual Report 2014 pg 57