FGV Annual Report 2016

ANNUAL INTEGRATED REPORT 2016 47 STRONG RESULTS IN CHALLENGING CONDITIONS The combination of aggressive promotional activities, stringent cost cutting exercises and the successful take up of new targeted products saw the Cluster put in a positive set of results despite challenging conditions. The Cluster's financial performance is typically affected by two (2) factors: i. The volatility in the demand for planting materials: Planters delayed their replanting programmes because of the dry weather in 2016 which reduced demand for planting material. ii. Foreign exchange rates: Fertilisers manufactured by the Cluster make use of inputs denominated in USD. Despite the delays in planting, the Cluster's flagship company, Felda Agricultural Services Sdn Bhd (FASSB), managed to maintain its CLUSTER PERFORMANCE: RESEARCH & DEVELOPMENT AND AGRI-SERVICES (RD&A) market share of the Malaysian seed market at 43%, and achieved its sales target volume through aggressive promotional sales and marketing campaigns, and the full-scale deployment of its sales force. High demand for rat bait also led to a significant increase in revenue for the RD&A Cluster. The Cluster's fertilisers division, FPM Sdn Bhd (FPM), also managed to record substantially higher PBZT of RM32.07 million compared to RM6.29 million in 2015, despite lower sales volume of 638,389 MT in 2016 compared to 731,993 MT in the previous year. Furthermore, fertiliser sales for new accounts grew to 92,652 MT in 2016 from 59,190 MT in 2015 as FPM penetrated new customer segments and markets during the year. As for the RD&A sub-cluster, our research unit managed to achieve all its stipulated targets through efficient utilisation of research funds despite challenging conditions. OPERATIONAL REVIEW Driving Innovation in Agribusiness FASSB successfully introduced the Felda Yangambi GT1 (GT1) and Palma Shield in 2016. Both products were developed by FGV R&D Sdn Bhd (FGVRD) to combat Ganoderma, an incurable palm disease. GT1 is the world's first palm planting material that is tolerant towards Ganoderma attacks while Palma Shield is a biocontrol agent providing protection against Ganoderma Basal Stem Rot (BSR). The combination of GT1 and Palma Shield applications in Ganoderma- endemic areas allows for better management of the disease thereby reducing plant loss from the disease. We are optimistic that the GT1-Palma Shield package will be a core product for the Cluster going forward. Introduced Felda Yangambi GT1 (GT1) and Palma Shield in 2016 to combat Ganoderma, an incurable palm disease. Our seeds are handpicked to ensure quality and standard. MANAGEMENT DISCUSSION & ANALYSIS