FGV HOLDINGS BERHAD | ANNUAL INTEGRATED REPORT 2023 63 From left • Mohd Amir Bin Redzuan - Head of Operations, MSM Sugar Refinery (Johor) Sdn Bhd (MSM Johor) • Dr. Mazatul ‘Aini Shahar Abdul Malek Shahar - Chief Financial Officer • Syed Feizal Syed Mohammad - Group Chief Executive Officer • Hasni Ahmad - Group Chief Operating Officer • Cheah Poh Lye - Head of Operations, MSM Prai Berhad • Sanuri Saari - Head of Operations, Sungai Buloh Warehouse LBT (RM23 million) 2022: (RM177 million) FINANCIAL PERFORMANCE REVENUE RM3,091 million 2022: RM2,566 million FINANCIAL PERFORMANCE During the year under review, the Sugar Division witnessed an improvement in financial performance, with loss before taxation decreased to RM23 million compared to the RM 177 million loss recorded in to the previous year. This improvement coincided with higher revenue of RM3,091 million, a 20% increase from RM2,566 million reported in 2022. The surge in revenue was primarily attributed to improved average selling prices, along with higher sales volume. Additionally, this included revenue from the sales of Premium Gula Super and industry incentives received from the government. Production costs increased in 2023 driven by higher NY11 prices, increase in the exchange rate, and elevated gas rates. However, this impact was mitigated by improved margins and better capacity utilisation achieved during the period. OPERATIONAL PERFORMANCE The Sugar Division remains committed to securing raw sugar at the most competitive prices, despite the challenges posed by fluctuating and increasing costs. In 2023, the Division procured 0.99 million MT of raw sugar from key sourcing countries such as Brazil, Thailand, and India. To mitigate the impact of rising raw sugar prices, we implemented various strategies. These included securing long-term freight agreements to control costs more effectively and engaging in options trading for Brent Crude Oil to capitalise on elevated energy prices and alleviate high gas expenses. Despite facing a decline in raw sugar volumes, demand within domestic markets increased by 3%. This growth can be attributed to ongoing initiatives aimed at aligning with customer needs and preferences, including expanding distribution networks and increasing Consumer Reach Points. The introduction of the new product, Premium Gula Super, a clear refined sugar retail product in May 2023, aided in bolstering domestic sales volume. Priced according to market forces, Premium Gula Super deviates from the government-controlled ceiling price for consumer retail packs of coarse grain and fine granulated sugar. By the end of 2023, over 25,000 MT of Premium Gula Super had been sold, showcasing the robust organic growth of this profitable product. Despite stiffer competition in the export market, there was revenue growth of 15% and 45% for our Asia and Oceania markets, respectively. Currently, the Division commands approximately 6% of the market share in the Asia-Pacific region, exporting to 30 countries from China to Pakistan. Recognising growth opportunities, we introduced a new 50 kg breakbulk method to strengthen our foothold in the export market. GROUP BUSINESS REVIEW
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