FGV Annual Report 2015

50 Felda Global Ventures Holdings Berhad Annual Integrated Report 2015 Turning Tides of Consumer Goods The FMCG sub-cluster also turned around a positive result in 2015. Delima Oil Products (DOP) has a sizeable market share in the edible oil and fats market domestically. Internationally, FMCG exports to Myanmar, Philippines, CIS countries, Africa and the Middle East. In 2015, revenue fell to RM807 million from RM974 million in the year prior. However, the sub-cluster’s bottomline profit before tax was RM14.3 million, improving from a loss before tax of RM11 million in 2014. DOP’s return to profitability is a direct result of various initiatives including gaining higher margins and the introduction of higher value new products. In 2015, DOP also ran cost saving initiatives, automated its in-house packing facilities and expanded its distribution network locally and internationally. Value of Divestment Transformation initiatives and structural changes implemented within the Group in 2015 had a positive impact on Palm Downstream’s financials. Revenue reduced to RM3.4 billion in 2015 from RM6.1 billion in 2014 due to the change of FVOP’s business model. This however, was a positive move that helped our bottomline. The Cluster results turned around in 2015 as a result of various cost saving initiatives, disposal of loss-making TRT-ETGO, improvement of processing cost and higher margin in RBDPKO. Profit before tax came in at RM9 million in 2015, compared to a loss before tax of RM14 million the year before. Via transformational initiatives, several sub-clusters managed to improve Palm Downstream’s total processing cost by 16%. Centralisation of trading under FGV Trading in the Trading, Marketing and Logistics (TML) Cluster effectively meant less revenue captured in Palm Downstream. In 2015, Palm Downstream Cluster sold refined products internally to FGV Trading and recorded tolling fees. The Oleochemical sub-cluster continued to capture larger volumes of sales of fatty acids and refined glycerine despite the lower margins experienced in the US in 2015. Our new venture, FGV Cambridge Nanosystems Ltd (FGV CNS) has started producing graphene and carbon nanotubes and is steadily securing new projects. In 2015, further investments were made into new ventures namely FGV China Oil, FGV Cambridge Nanosystems and FGV Green Energy which are expected to add to our revenue and bottomline in the near future. Capabilities to Drive Profitability Our Manufacturing & Processing sub-cluster, which refines vegetable oil, crushes and produces palm kernel products and produces biodiesel, also achieved a positive turnaround in 2015. Compared to 2014 losses, the sub-cluster realised a profit before tax of RM11.9 million. The profit was, for the most part, attributable to performance excellence by our palm kernel crushing operations. Given the lower export demand during the year and decline in volumes the profit is a commendable achievement. This turnaround is due to the Group transformation activities which emphasises plant efficiency, cost optimisation and sustainable growth. For the mid-to-long term, FGV Biotechnologies will play a bigger part in Palm Downstream Cluster’s portfolio. It has already obtained both Halal and Kosher certification for its Palm Methyl Ester production. These certifications will aid in our ambitions to penetrate the food industry. In 2017, we plan to complete FGV Green Energy which will facilitate further expansion in the biodiesel sector. Business Operations Review Palm Downstream DOP also enforced Quality Control and Assurance improvement initiatives at DOP’s plants to ensure high quality products for customer satisfaction. Saji brand cooking oil is one of DOP’s top products and currently has presence in Myanmar, Philippines, Laos, Cambodia, Vietnam and Afghanistan. DOP’s new product launches in 2015 Adela Cocoa Powder Adela Margarine Tub Sunbear Peanut Butter Stripe Saji Paste