BUILDING VALUE AT OUR CORE SEC 5 60 GROUP BUSINESS REVIEW The segment recorded lower bulk oil sales in 2023, totalling 2.98 million MT. This was due to the lower FFB received, particularly in the first half of the year, influenced by adverse weather conditions that resulted in poor pollination and fruit sets. In addition, intermittent periods of lower demand throughout the year further compounded the challenge of maintaining favourable profit margins. To increase the number of FFB received, we are actively expanding our supplier base with a focus on prioritising sustainability compliance. We are also enhancing the FFB Supplier Information System to maintain upto-date information on our suppliers and ensure their compliance with the Group Sustainability Policy. Currently, FFB is sourced from internal production, FELDA settlers, as well as third-party suppliers. Overview The Marketing & Trading segment plays a pivotal role in FGV’s revenue generation by overseeing the sales and trading of bulk oils. As a comprehensive solution provider, we serve as a single point of contact, offering end-to-end supply chain services encompassing export planning through to final delivery. We have a team of experienced specialists adept at efficiently managing international trade logistics in global shipments and local distribution, while also addressing the specific needs of local buyers. From the total CPO traded yearly, around 56% is allocated to committed buyers, including our Downstream segment, while the remaining 44% is primarily directed towards uncommitted bulk buyers in key markets such as Pakistan, India and China. This strategic distribution underscores our segment’s agility and capability in navigating both stable partnerships and dynamic global markets. Bulk Buyers Committed Buyer Uncommitted buyer 56% 44% Total Sales of Bulk Oils (Million MT) *inclusive of local and export 2.98 3.13 2.81 2023 2022 2021 Engaged with Key FFB Suppliers, who accounted for 57% of FFB purchased in 2023, by in providing capacity-building support and facilitating best practices to promote a sustainable environment across our supply chain. FGV prioritises the quality of CPO delivered to buyers, therefore we closely monitor quality standards in FFB sourcing and collaboration with key stakeholders across the supply chain, including mills, refineries and logistics partners. Our approach includes efficient backlog management and the segregation of CPO based on quality inspection at the mill bulk storage tank. During the period under review, one of our major export markets faced a liquidity crunch due to dwindling foreign currency reserves, causing delays in processing import documents. To navigate this, we worked closely with buyers and banks to facilitate the resumption of CPO exports, effectively minimising disruptions in trading 170,000 MT of CPO. Despite these challenges, we witnessed a steady recovery in the latter half of 2023, resulting in an average CPO price realised of RM3,901. This led to an overall improvement in palm trading margins. We continued our efforts to expand the market for premium oils, such as Mass Balance Roundtable on Sustainable Palm Oil for both Crude Palm Oil and Crude Palm Kernel Oil (CPO MB and CPKO MB), Crude Palm Oil International Sustainability & Carbon Certification (CPO ISCC), and High IV for Refined, Bleached and Deodorised Palm Olein (RBDPO). We leveraged our mills’ capabilities to produce these high-quality oils, which was a contributing factor to our performance in 2023. MARKETING & TRADING
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