BUILDING VALUE AT OUR CORE SEC 5 64 As the Division adeptly addressed various operational challenges, its overall utilisation factor improved to 48% in 2023. Significant achievements at MSM Johor included the successful completion of changeout repairs to Boiler #1 in April 2023, effectively resolving operational inefficiency that had persisted since 2019. Additionally, the upgrade of the Industrial Effluent Treatment System (IETS) at MSM Johor in October 2023 ensured compliance with the Department of Environment’s limits for effluent discharge. Furthermore, the completion of a new warehouse, increasing the storage capacity by approximately 10,000 MT, is poised to support operational ramp-up at MSM Johor. GROUP BUSINESS REVIEW Outlook The Division’s primary focus has been on stabilising the financial outlook by strengthening operational capabilities and implementing strategies to secure higher retail prices, thereby bolstering revenue. With a stronger financial foundation, the Sugar Division aims to broaden its sugar operations beyond Malaysia and potentially add new commodities to its portfolio in the longer term, leveraging its expertise in mid-stream processing, distribution and marketing. Immediate priorities include navigating existing challenges, capitalising on the success of the Premium Gula Super product, exploring export opportunities, and ensuring operational resilience amid raw price volatility, geopolitical unrest and currency fluctuations. NAVIGATING CHALLENGES Raw Sugar Import Volume (Million MT) 0.99 1.01 0.97 2023 2022 2021 Export Sales Volume (Million MT) 0.21 0.22 0.25 2023 2022 2021 Domestic Sales Volume (Million MT) 0.77 0.75 0.69 2023 2022 2021 Utilisation Factor (%) 48 46 44 2023 2022 2021 CHALLENGE RESPONSE Higher production costs result from increase’ in raw sugar NY11 prices, freight charges, energy expenses, as well as the depreciation of the Ringgit Malaysia • Optimising hedging mechanism to hedge against price volatility in raw materials, freight and energy costs, and foreign exchange rates, provides greater cost certainty for budgeting and planning • Improving average selling prices through pricing strategies to reflect the increased production costs while remaining competitive in the market • Growing sales volume through the widening of distribution channels and increasing Consumer Reach Points • Continuously engaging with industry stakeholders and government agencies to develop collaborative solutions aimed at addressing pertinent issues and fostering sustainable growth • Leveraging industry incentive to offset increased production costs Lower utilisation factor and production efficiency • Focusing on reliability programmes and process improvements at refineries • Engaging with consultants and experts to optimise the overall sugar refining process
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