FGV Annual Report 2014

The Downstream Cluster aims for a leading position globally in industrial fats, and regional heavyweight status in palm-based consumer goods. FGV strives to diversify further into downstream activities, in order to create additional revenue streams. This is to ensure adequate uptake of upstream output and to build a complete supply chain. The Downstream Cluster is organised into three sub-Clusters, namely: i. Processing: Felda Vegetable Oil Products Sdn Bhd (Refining), Felda Kernel Products (kernel crushing) and Biodiesel production ii. Oleochemical and others: TRT-US (Oleochemicals such as glycerine and methylester), Felda Procter & Gamble (FPG), TRT-ETGO (Soybean and Canola Crushing) and FGV – Cambridge Nanosystems Ltd (FGVCNS) iv Fast Moving Consumer Goods (FMCG): Delima Oil Products Sdn Bhd (DOPSB) and specialty fats. Financial Performance and Industry Outlook For the year under review, the Downstream Cluster recorded RM7.2 billion in amalgamated revenue and loss before tax of RM126.6 million. The Processing sub-Cluster, which focuses on vegetable oil refineries, palm kernel crushing and biodiesel, generated revenues of RM4,515.3 million and reduced its amalgamated loss before tax of RM35.8 million in the previous year to RM29.7 million in 2014. Revenues in 2014 were primarily boosted by strong performance in our palm kernel crushing operations, which saw a revenue gain of 20.4 percent compared to the previous year. Profitability in 2014 was at RM26.5 million. The decrease of revenue in the refining sector was mainly attributed to lower demand for the export market. This has also resulted in lower overall factory utilisation factor, from 69 percent in the previous year to 55 percent in 2014. In Oleochemical and Others sub-Cluster, an amalgamated revenue of RM1,867.5 million was recorded, an improvement in performance of almost 92 percent compared to the 2013. For the year under review, our US operation, TRT-US recorded profitability of RM36.5 million – attributable to higher selling price, increase in production volume and innovative cost saving initiatives. Our Canadian business, TRT-ETGO, reported a loss before tax of RM81.8 million. Commercial and operational challenges endured during an abnormally hard winter in the first quarter of 2014 contributed to these losses – which translated to lower crushing margins for both canola and soybean as compared to the previous year. Additionally, losses in fair valuation of commodity future contracts contributed to our performance in 2014. Our new business entity, FGV Cambridge, Nanosystems Limited (FGVCNS) recorded revenues of RM3.7 million in its first year of operation. The production facility located in Cambridge, UK, produces high grade Carbon Nanotubes from crude palm oil and exceptional quality graphene from methane gas, natural gas and bio-gases. Felda Global Ventures Holdings Berhad pg 74 BUSINESS OPERATIONS REVIEW PALM DOWNSTREAM