FGV Annual Report 2020

In 2020, the COVID-19 Movement Control Order caused disruptions to the supply chain. There were delays in raw material supply, response times of vendors providing technical services and a decline in demand for products. Since 2018, FGV has rolled out the Loss Elimination Project as part of our cost reduction initiatives. This has enabled us to achieve significant savings in our operations. FGV’s immediate to mid-term focus here is to continue with our strategy to reduce operational costs. One opportunity for this lies in investing in energy efficiency systems. At Delima Oil Products, for example, there are plans for an Energy Management System Certification and the installation of a solar power system to save on energy costs. Sustainability Matters FGV’s downstream business is engaged primarily in the manufacture of palm oil based products. The primary focus here is to maximise value creation and optimise our oils and fats and oleochemical positions to increase market share. We have five subsidiaries entrusted to produce different products and services. They are: that manufactures and markets FMCG products, industrial packed products, bulk sales, OEM products and international sales. Delima Oil Products Sdn. Bhd. buys palm kernel shells from FGV Plantations and other suppliers to produce Crude Palm Kernel Oil (CPKO), Palm Kernel Expeller (PKE) and Animal feed. FGV Kernel Products Sdn. Bhd. provides refining and fractionation services for Crude Palm Oil (CPO) and CPKO. It also offers these services to private companies to optimise additional capacity. FGV Refineries Sdn. Bhd. manufactures biodiesel (Palm Methyl Ester) from CPO and related by-products such as refined glycerine and Palm Fatty Acid Distillate (PFAD). FGV Biotechnologies Sdn. Bhd. one of the largest oleochemical manufacturers and suppliers in North America. Twin Rivers Technologies Holdings, Inc. Centralised Sales and Marketing FGV has a centralised sales and marketing arm for our various midstream products. In 2020, primary products traded were vegetable and lauric oils, in addition to biodiesel and related products. Since 2019, FGV has always placed an emphasis on the optimisation of trading margins. In pursuit of achieving such margins, we have been executing an asset-based trading model to ensure FGV product pricing strategies are competitive, especially for both domestic and export market. Furthermore, we are continuously deploying robust sales and marketing strategies, as well as structuring our approaches according to different countries and product requirements. H I GH VOLUME T RAD I NG FGV’s Plantation business is a significant contributor to Group revenue from the trading of high volumes of vegetable oils, lauric oils and biodiesel products. Simultaneously, FGV seeks to expand, strengthen and explore marketing and trading networks. Although the COVID-19 pandemic has affected some of our drive to develop new growth areas, we have made progress in penetrating the Indian market. In July 2020, we incorporated FGV PU India Pte Ltd., a joint venture based in Hyderabad. By 2022, we plan to utilise FGV PU India Pte Ltd. as FGV’s vehicle for downstream FMCG food products in India. As we move further forward, FGV plans to focus on export sales and diversify our product portfolios. In anticipation of this direction FGV will be taking steps to become business ready to seize new opportunities and manage the challenges in a competitive operating landscape. 104 FGV HOLDINGS BERHAD Annual Integrated Report 2020