FGV Annual Report 2017

ANNUAL INTEGRATED REPORT 2017 UNDERSTANDING OUR BUSINESS CONTEXT 55 OUR PERFORMANCE BY SECTOR: LOGISTICS AND SUPPORT BUSINESSES Management Discussion & Analysis OPERATIONAL PERFORMANCE During the year under review, through our subsidiary Felda-Johore Bulkers Sdn. Bhd. (FJB) and Felda Transport Services Sdn. Bhd. (FTS), we stored 7.56 million MT of oils and grains in our bulking and warehouse facilities and increased transport volume to 5.09 million MT. The increase of 16% in bulking and transport segments was contributed by the higher volume of CPO produced in 2017. Under our cost-rationalisation initiative, FJB implemented the Cost Control Programme (CCP), which capped the Group’s fuel consumption at RM3.10 per MT. This contributed to cost savings of around RM6.70 million in 2017. In 2017, we expanded our total storage capacity by 31,000 MT with the new storage tanks located in Pasir Gudang. FJB Group contributed more than 10% to the Sector’s revenue. Our subsidiary in Pakistan, FWQ Enterprises (PVT.) Ltd has completed the construction of a 38,300 MT edible oil storage facility in Port Qasim, Pakistan that is slated to commence operations in 2018. This new storage facillity will expand from solely jetty operations at present. This will also help FGV to grow its logistics-related assets and capitalise on the leadership position in the country. Since it will only be operational from 2018 onwards, its storage capacity has not been factored into total storage capacity for the year under review. In the non-core business segment, Felda Engineering Services Sdn. Bhd. successfully set up a construction arm to undertake the development and construction of a hostel for the Malaysian Public Works Department over two years period, whilst Felda Prodata Systems Sdn. Bhd. secured three ICT contracts to supply hardware and software for a contract centre, develop a Customer Relationship Management System (CRMS) and provide ICT equipment maintenance services for 18 to 36 months. The increase in CPO production volumes led to an improvement of the bulking and transportation activities in 2017. Total Storage Capacity MT Storage Tank Utilisation Rate Times Jetty Handling Volume Million MT 2016 2016 2016 2017 2017 2017 923,900 7.07 2.77 954,900 Transport Volume Million MT 2016 2017 4.39 5.09 Bulking Volume Million MT 2016 2017 6.53 7.56 7.92 3.18 • Increase handling of high-value products (e.g. oleochemicals) to more than 30,000 MT per month • Construct new facilities to cater to demand for various oils and chemicals • Participate in ICT logistics for mega-projects such as ECRL, MRT2 and LRT3 • Procure logistics assets to strengthen our capacity for external business STRATEGIES IN CREATING VALUE EP