Plantation Sector As part of our continuous effort to generate cost efficiencies by consolidating common functions to reap economies of scale, FGV has established a centralised sales and marketing arm for our various mainstream products. Aside from cost reduction, this move also facilitates and enhances cross selling opportunities for our products. In 2020, primary products traded were vegetable and lauric oils, in addition to biodiesel and related products. Downstream margins for 2021 were pressured by the increase in CPO prices. However, the heightened demand in oleochemical by-products such as glycerine and esthers, to meet growing demand for detergents, cleaning products and sanitisers, steered us towards commendable performance. This was accompanied by higher than forecasted cost savings of RM15.66 million from the segment’s successful Loss Elimination programme in 2021. Furthermore, as our food products are considered essential staple items, they benefited from the surge in consumer demand catalysed by the rising trend of cooking at home during the year’s lockdown and restricted movement phases. This helped make up for the loss in business from the HORECA (Hotel/Restaurant/ Café) market segment where businesses were impacted by prolonged closures. To enhance returns and reinforce business sustainability, FGV places strong emphasis on optimising trading margins. In pursuit of higher margins, we executed an asset-based trading model to ensure that FGV product pricing strategies are competitive, both domestically and overseas, in order to protect our market and retain customers. Furthermore, we continuously deploy robust sales and marketing strategies, as well as structure our approaches to align to unique product requirements in different countries and across different customer segments. Simultaneously, FGV seeks to expand, strengthen and explore marketing and trading networks. In spite of the challenges presented by the COVID-19 pandemic, we continue to expand our portfolio of products. These include three new animal feed pellet formulation, high IV olein, PMF, the improved healthier recipe of Adela margarine spread and pastry margarine. Moving forward, we are mindful that responding to customer needs will be critical to success and thus a greater focus on product expansion is in the pipeline as we continue to explore affordable health-focused benefits for our food products in line with new lifestyle demands for healthier food options. Most crucial however, we will be escalating responsibility in meeting sustainability expectations and engaging with industry decision makers to positively respond to recent global market posturings such as European Union’s announced intentions to phase out palm oil imports from Indonesia and Malaysia by 2030 over concerns of deforestation, as well as looming political discord stemming from Russia’s invasion of Ukraine. A further key priority moving ahead into 2022 is to expand deeper in the Downstream segment by supplying feedstock at destination markets. This is in addition to increasing our profitability in the premium oil segment for CPO MB, CPO ISCC, CPKO MB and High IV RBD Palm Olein as we aim to achieve higher margins for all product segments. The Resource Efficiency and Industrial Symbiosis Opportunity Assessment (REISO) is a program overseen by SIRIM Berhad (SIRIM) and Ministry of International Trade and Industry (MITI) to assess the organisations to achieve resource efficiency and to study the potential industrial symbiosis within an industrial park. In August 2021, FGV subsidiaries participated in this program, namely FGVKP, FGVR, FGVB and DOPSB. This program serves as an assessment for FGV related businesses to evaluate, identify, and present opportunities for cost optimisation and minimise environmental impact via resource minimisation, by-product, and waste utilisation. The REISO assessment outcome will help uncover the potential to transform industrial sites into eco-industrial parks. A further key priority moving ahead into 2022 is to expand deeper in the Downstream segment by supplying feedstock at destination markets. This is in addition to increasing our profitability in the premium oil segment for CPO MB, CPO ISCC, CPKO MB and High IV RBD Palm Olein as we aim to achieve higher margins for all product segments. 57 CLIMATE ACTION & ENVIRONMENT PROTECTION ADDITIONAL INFORMATION SUSTAINABILITY REPORT 2020/2021
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