KEY RISKS AND UNCERTAINTIES FGV operates in a dynamic environment, navigating macroeconomic and industry-specific risks that may impact performance, assets, liquidity, capital, and reputation. To manage these risks, the Group conducts systematic reviews aligned with its strategic goals. A forward-looking approach is adopted to identify emerging risks through horizon scanning, internal surveys, and market analysis. These risks are assessed by RMC, BGRMC, and the Board, with continuous monitoring and integration into risk management processes to mitigate potential threats and capture opportunities. TRADING RISK TR How it Affects FGV How it Affects FGV Crude palm oil (CPO), raw sugar, fertiliser and energy prices as well as foreign exchange volatility are driven by factors such as global supply and demand fluctuations, weather conditions, supply chain disruptions and government policies. As these commodities continue to represent FGV’s key feedstock and earning drivers, significant shifts in the global market trends and prices may create uncertainty in FGV’s ability to maintain cost competitiveness, revenue stability, and healthy profitability. Geopolitical conflicts, conduct of economic pacts, and global trade restrictions or relaxation such as maritime shipping route disruptions, import/export tariff and quota revisions, and regulatory changes including more stringent product standards, pose uncertainty and complexity to FGV’s market access and supply chain. The effects may be either adverse or beneficial to FGV, potentially creating new or more opportunities depending on source countries and destination markets. Mitigating Actions • Continuous Assessments: Manage sales to both committed and uncommitted commodity buyers. • Employ Derivative Instruments: Use derivative instruments to minimise price volatility and protect financial performance. • Trading Policy Compliance: Adhere to FGV’s Commodity Trading Policy to ensure responsible trading practices. • Market Intelligence: Continuously monitor industry reports, market analyses, and expert insights to stay informed on global economic and commodity market trends. Mitigating Actions • Withhold Release Order: Actively engaging with the United States Customs and Border Protection (CBP) to modify the Withhold Release Order (WRO). • European Union Regulations: Ongoing ministerial-level discussions with European counterparts on the European Union Deforestation Regulation (EUDR) directives. • New Markets: Actively explore export opportunities in the Middle East, North Africa (MENA) and African countries. • Labour Supply: Maintaining relationships with key laboursourcing countries to ensure a steady workforce. • Supply Chain: Optimises bulk shipments, sources from alternative suppliers, position raw materials strategically, participate in pre-tender purchases, and closely monitor global prices. Commodity Prices and Foreign Exchange Geopolitical Tensions and Trade Restrictions 227 Sec 07 SUSTAINING VALUE THROUGH GOOD GOVERNANCE
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