FGV Annual Report 2016

FELDA GLOBAL VENTURES HOLDINGS BERHAD 14 WHO WE ARE & HOW WE CREATE VALUE By 2020, the world will have more elderly people than young children resulting in an impact on lifestyle, forcing healthier dietary requirements and lessening price sensitivity. 20% 10% 18% 8% 16% 6% 14% 4% 12% 2% 0% Young children and older people as a % of global population 1950-2050 GLOBAL DEMOGRAPHIC SHIFT & IMPACT ON FOOD DEMAND 1950 2020 2050 Vegetable oils & fats market (Mil MT) 145 2011 22 23 41 48 50 23 24 42 23 24 43 55 23 26 45 57 24 27 47 61 24 28 48 65 24 29 50 69 25 30 52 73 25 31 54 77 26 33 56 82 12 13 13 15 15 16 17 18 20 21 +5% +5% 152 2012 158 2013 166 2014 173 2015 181 2016 189 2017 198 2018 207 2019 217 2020 111 115 119 126 140 115 120 120 133 149 767 664 756 668 679 761 664 726 672 684 Market size (USD 'Bil) Average price ($/MT) CAGR ('15-'20) Market Size USD 'Bil ('20F) Others Sunflower Canola Soybean Palm 1.7% 1.76 6.6% 14.3 3.8% 22.3 3.5% 38.1 6.3% 56.4 "Within 10 years, Palm sources in edible oils doubled in size because of its high yields and consistent results." • In 2017/18, global sugar production will complete its recovery from the 2015/16 decline, helped by solid production incentives in Brazil as well as Asian output returning to its pre-2016 elevated levels. • Long run prices to be a relatively supported due to recovery of market balance, depleting sugar inventories and stocks-to-use ratio. Mil/MT 180 188 190 178 186 176 184 174 182 172 170 168 166 164 156 2015 2014 2016f 2017f 2018f 2019f 2020f AGE 65+ AGE <5 PRODUCTION CONSUMPTION PRICE 18.20¢ 19.30¢ 19.30¢ 19.00¢ PALM OIL - WILL REMAIN THE LARGEST AND FASTEST GROWING MARKET GLOBALLY SUGAR OUTLOOK : DEMAND FOR REFINED SUGAR WILL CONTINUE TO OUTPACE PRODUCTION AND RAW SUGAR PRICE IS EXPECTED TO RISE IN TANDEM HENCE PUTTING PRESSURE ON REFINING MARGIN Source: BMI Research Source: Boston Consulting Group MARKET LANDSCAPE Source: World Economic Forum, United Nation • Europe remains as the 'oldest' region till 2050 • China & India - proportion of age 65+ will be significant due to population size • 'Youngest' countries are : - South & Central Asia - Middle East (Kuwait, Yemen, Saudi Arabia) - Southeast Asia (Laos) In 'older' countries, dietary needs will focus on healthier options & willingness to pay premiums, while 'younger' countries will demand cost competitive goods to cater for rapid growth, hence Fast Moving Consumer Goods (FMCG) strategy will have to align accordingly. Price Usc/lb 19.5 15.5 15.0 11.5 13.5 19.0 18.5 14.5 14.5 16.5 16.0 12.5 13.0 12.0 18.70¢