FGV Annual Report 2017

FELDA GLOBAL VENTURES HOLDINGS BERHAD UNDERSTANDING OUR BUSINESS CONTEXT 42 Downstream Cluster Our subsidiary in the Fast-Moving Consumer Goods (FMCG) segment, Delima Oil Products Sdn. Bhd. (DOP), undertook several measures to improve SAJI’s domestic market share, including expanding its high-margin customer base in modern trade and HORECA (Hotel, Restaurant and Catering). This helped to achieve a gross profit before advertising and promotions (A&P) of RM76.50 million. DOP is also focused on developing new food products that provide higher margins and volumes. In 2017, six new products have been produced, i.e. SAJI Kaya Spread, SUNBEAR Hazelnut Chocolate Spread, SAJI All-Purpose Seasoned Flour, Krimer Jagung, Krimer Tembikai Susu and SAJI Garam Gunung . The Ministry of Domestic Trade, Co- operatives and Consumerism (KPDNKK) on 1 November 2016 implemented the revised Cooking Oil Stabilisation Scheme (COSS) to discontinue subsidies for 2kg and 5kg cooking oil, thus eliminating manufacturer cooking oil quotas. As a result, the sales volume of 5kg cooking oil dropped by 25% in 2017. This was partially mitigated by the 18% increase in 2kg cooking oil sales volume, which reflected the increased demand for the 2kg packaging due to its affordability vis-à-vis 5kg cooking oil. Various cost-saving initiatives were implemented in 2017 at our refineries, including optimising consumption processes and logistics facilities, improving product formulation, as well as optimising the utilisation rate. These efforts increased our factory level efficiency and yielded around RM13.87 million in savings. On the oleochemical front, we sold 35,700 MT of biodiesel through local mandates and 4,991 MT in our export markets. However, our endeavours to penetrate new markets for B10 (retail) and B7 (industrial) targeted at petroleum companies’ terminals in the Central (Klang Valley Double Track) and Southern Regions (Pasir Gudang) had to be halted. This was mainly due to the difference between CPO and diesel prices in the current volatile market. Malaysia Automotive Association (MAA) is currently gatheringmore industry data in support of the campaign to increase biodiesel usage in automotive vehicles. During the year under review, our US operations (TRT-US) secured five new customers in North America and shipped 6.40 million lbs. of both kosher palm and coconut fatty-acid products. We will accelerate the expansion of our kosher certification in 2018. The cluster refines 39% of FGV’s total CPO volume to produce RBD olein, cooking oil, margarine & shortenings and specialty fats for industrial usage and consumer consumption. OUR PERFORMANCE BY SECTOR: PLANTATION Management Discussion & Analysis FMCG Products Sales Volume Million MT Biodiesel/Oleochemical Products Sales Volume MT 2016 2016 2017 2017 0.36 45,774 0.34 45,743 New brand logo for SAJI products was launched in March 2017.