RUBBER In 2024, FGV’s rubber business navigated a dynamic landscape shaped by supply challenges, regulatory shifts, and rising costs. Unfavourable weather conditions disrupted global rubber production, raising concerns over raw material availability. Meanwhile, the EUDR heightened the need for traceability, prompting Malaysia and Indonesia to push for clearer guidelines to safeguard smallholder participation. To ensure compliance, FGV strengthened traceability through geo-mapping, securing EUDR-compliant production at two rubber factories, each producing 2,000 MT of deforestation-free, sustainable rubber monthly. Additionally, the Palong 8 rubber factory obtained Forest Stewardship Council (FSC) certification, reinforcing responsible sourcing practices and maintaining access to premium markets. Limited land availability for rubber cultivation continues to affect local sourcing, prompting FGV to bridge production gaps by sourcing 70% of raw materials from Southeast Asia and Africa at competitive prices. However, rising variable costs due to geopolitical tensions and supply chain disruptions have put pressure on margins. Port congestion and container shortages further drove up transportation costs and caused delivery delays. In response, FGV diversified shipping routes, expanded haulage providers, and increased warehouse capacity, helping to minimise shipment delays and improve customer satisfaction from 70% to 85%. Business Review: Plantation Division WHO ARE WE AND WHAT WE DO OUTLOOK AND PROSPECTS Global demand for natural rubber is expected to remain steady in 2025, driven by the automotive sector, particularly electric vehicle and sustainable tyre production. The shift toward green rubber is accelerating, with manufacturers prioritising low-carbon materials. To capitalise on this trend, FGV is expanding green rubber production and promoting certifications such as EUDR compliance to attract eco-conscious buyers. Growth in the construction and industrial sectors further supports demand, creating opportunities for high-value, bio-based, and recycled rubber products. However, regulatory pressures such as EUDR compliance require stronger traceability and sustainability certifications, including FSC and Malaysian Sustainable Natural Rubber (MSNR). FGV is addressing this by strengthening supplier networks, improving local processing, and investing in digital traceability. Climate risks, labour shortages, and logistics disruptions remain challenges. These are being mitigated through regional sourcing, transportation optimisation, and smart farming. FGV’s rubber is committed to navigate the challenges by fostering strong teamwork, reinforcing compliance, enhancing traceability, and driving sustainable and profitable growth. Our Rubber segment boasts over 50 years of expertise in the rubber industry, with operations supported by rubber sourced 30% internally from local plantation estates and 70% through imports to meet production demand. We operate five factories in Malaysia producing Standard Malaysian Rubber (SMR) and Green Rubber products, along with a facility in FELTEX, Thailand, that produces latex concentrate for global glove manufacturers. Additionally, our facility in FGV CVC Cambodia Co., Ltd. specialises in Standard Cambodian Rubber (CSR). With a total production capacity of 248,740 MT, we are among the key players in the global rubber market. FGV is the sole producer of Green Rubber products in Malaysia, including FGV-ENR (Ekoprena) and FGV-DPNR (Pureprena), which are primarily used in automotive and engineering parts, with some applications in eco-friendly tyres. These sustainable rubber solutions support the industry’s shift towards eco-friendly materials in high performance applications. As one of the producers of SMR, FGV continues to enhance quality, efficiency and sustainability in our operations to meet market demands. BUSINESS ENVIRONMENT 88 FGV Holdings Berhad | Annual Integrated Report 2024
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