FGV Annual Report 2014

The Rubber Cluster aims to transform FGV's current rubber processing operation into a leading integrated rubber business. In line with this, its vision is to achieve a top five (5) position in global sales of processed rubber, amounting to more than 1.0 million metric tonnes by 2020. The Cluster sells latex concentrate, Standard Malaysian Rubber (SMR), Standard Indonesian Rubber (SIR), Cambodian Standard Rubber (CSR) and 'Green Rubber' products. In Malaysia, our rubber processing operations are managed by Felda Rubber Industries Sdn Bhd (FRI), which controls seven factories. We have management control of rubber-processing assets in Thailand (Feltex), Indonesia (PT Felda Indo) and we are expanding to Cambodia (FGV-CVC) this year. In Myanmar (FGV Pho La Min Company Ltd), we established a strategic partnership to further expand upstream and midstream activities. These overseas assets will enhance FGV Group’s overall overseas experience as well as improve rubber turnover, which will contribute to the Group’s revenues and profitability. Financial Performance and Industry Outlook For the year under review, Rubber Cluster recorded revenues of RM740 million, which was 27 percent lower as compared to the previous year. FRI's Rubber production including green rubber, decreased 4 percent to 93,294 metric tonnes in 2014 as compared to the previous year. PT Felda Indo Rubber 2014 production was 8,586 metric tonnes, mainly due to lower raw material volumes purchased. Feltex's total rubber production in 2014 fell to 12,971 metric tonnes, compared to 13,198 metric tonnes recorded in 2013. On the other hand, Feltex’s Latex Concentrate and Skim Block production in 2014 had surpassed production volumes in 2013. FGV Rubber started a new operation in Cambodia during September 2014. This operation, FGV-CVC, produce 4,744 metric tonnes of Cambodian Standard Rubber (CSR). In our upstream operations, we faced declining global commodity prices and yield. To offset falling natural rubber prices, cost reduction efforts were implemented. We also adopted the latest tapping system, late tapping, double tasking, recovery tapping and the use of latex stimulants to improve yield. In downstream, FGV Rubber signed a Technology Transfer Agreement with Malaysian Rubber Board (MRB) to commercialise Green Rubber Products, namely Ekoprena and Pureprena on 10 October 2010. To enhance the market development, the Cluster participated in various international exhibitions, conferences and seminars to increase promotional activities and product awareness. Felda Global Ventures Holdings Berhad pg 78 BUSINESS OPERATIONS REVIEW RUBBER