FGV Annual Report 2020

The year 2020 was a challenging one for the plantation business that was affected by three (3) key factors: • Lag effect of dry weather and drought that resulted in lower fresh fruit bunches (FFB) production, with subsequent declines in yield performance, oil extraction rate (OER) and utilisation factor resulting in higher costs of production ex-mill. • Shortage of migrant workers due to the Government directive to close borders to prevent the spread of the COVID-19 pandemic. • COVID-19 pandemic movement restrictions in Malaysia and global economic lockdowns and overall economic slowdown that resulted lower demand and consumption, especially by the HoReCa (Hotel, Restaurant and Cafe) business. The challenge have increased the needs to take action on the current sustainability risks, particularly on the climate and environmental risk. Initiatives including mitigation actions have been undertaken and the details are disclosed in Section 4 of this report. These negative impacts were also mitigated by higher average Crude Palm Oil (CPO) and Palm Kernel Oil (PKO) prices that increased by 30% and 28% respectively during the year. Overall, the Plantation Business recorded an increase in profit before zakat and taxation (PBZT) of RM402 million in 2020 (2019: LBZT RM9 million) on the back of an 6% increase in revenue that stood at RM11.57 billion (2019: RM10.89 billion). The Plantation Business is the backbone of the FGV Group, and it is primarily engaged in the entire palm oil value chain, from upstream, downstream, marketing & trading to research & development activities. This business is also engaged in rubber upstream activities. Group Business Review P lantat i on 64 FGV HOLDINGS BERHAD Annual Integrated Report 2020