MSM Malaysia Holdings Berhad Annual Report 2020

MSM STRATEGY PROGRESS & ACHIEVEMENT 2020 Progress & Achievement 2020 Priorities Key Strategies Cash Flow Driven 1. Reduce stock holding 2. Monetise non-core assets Reduced raw sugar stock holding via “Just-In-Time” mechanism • Reducing raw sugar balance, optimising warehouse rental cost and improving cash balance. Monetise non-core assets • Efforts to monetise non-productive and unutilised assets will be ongoing in 2021. Restructure Business 1. Balancing production capacity within MSM Group’s operation – MSM Prai and MSM Johor 2. Focus on product diversification 3. R&D on food and non-food sugar related products Consolidation of production in MSM Johor • MSM Perlis refinery operations has been successfully discontinued on 30 th June 2020. • The production volume from MSM Perlis was successfully consolidated to MSM Johor and MSM Prai whilst improving refining cost. Launch of Premium Prai’s products (Sugar Stevia Mix and Sugar Sucralose Mix) • Premium Prai is an alternative sweetener brand with lower caloric value mixtures of different types of sweeteners. • The products are mostly sold in convenient stores with easy to use sachets for on-the-go lifestyles. • The small sachet size is suitable for take away use with drinks, travel and flights. Further exploration downstream into sugar related business • A detailed study on the condensed milk business model was achieved. Further R&D will be required to obtain the right recipe and target market. Stabilise & Turnaround 1. Increase efficiency 2. Lower refining cost – energy cost saving strategies 3. Increase export of value added sugar products (new SKU) Improving production efficiency and yield • MSM Johor’s yield has improved to 90% in 2020 compared to 88% in 2019. Energy cost saving projects are being explored • Biomass Boiler project and Solar photovoltaic system were identified to reduce energy cost and carbon footprint. • Rationalising CAPEX and prioritising the ramp up plan for MSM Johor refinery. • Achieved a higher production volume from higher exports helping the plant to achieve a lower refining cost. Export value-added sugar products (new SKU) • In 2020, MSM has continued exporting premix, liquid sugar and fine syrup to China. • Capacity expansion for fine syrup was completed in 2020. • The capacity expansion of the liquid sugar and premix facilities in MSM Johor will be fully completed in 2021 to cater for the increasing demand from China and other Asian markets. MSM MALAYSIA HOLDINGS BERHAD Annual Repor t 2020 28 CHAIRMAN’S STATEMENT DELIVERING VALUE MSM OVERVIEW MANAGEMENT DISCUSSION & ANALYSIS GROUP FINANCIAL REPORT