MSM Malaysia Holdings Berhad Annual Report 2020

BUSINESS REVIEW RAW SUGAR SOURCING & PROCUREMENT “Despite the pandemic, NY11 prices in 2020 has been generally favourable for the Group, trending between USD11.00 – 15.00 cents/lb. The stable prices were contributed from high production in Brazil which balanced out shortages f rom Thailand due to extreme drought. The drought in Thailand is expected to prolong whilst the situation in Brazil remains encouraging for rawsugar production. However, the price outlook is bullish mainly due to the projected post- pandemic economic recovery, improvements in crude oil price and weather risks in Brazil.” Performance 2020 2019 Procurement of Raw Sugar (tonnes) 1,092,869 923,895 Physical Trading of White Sugar (tonnes) 225,779 88,500 2021 PRIORITIES: S ecure our raw sugar for the year below the market average, to help the Group in achieving the lowest possible production cost MAINTAINING MARKET LEADERSHIP The year’s focus was directed towards minimising the Group’s production cost by securing the lowest possible price of raw sugar amid global supply tightness due to production shortages fromThailand and the increased trend of Crude Oil prices. Through sustained hedging practices, MSM was able to secure Raw Sugar prices at USD12.70 cents/lb which was below both the market average of USD12.89 cents/lb, and the budgeted USD13.00 cents/lb. Towards better and more informed decision making, weekly Trading Committee meetings commenced during the year to keep the Group’s top management updated and informed on the current global sugar situation. MSM MALAYSIA HOLDINGS BERHAD Annual Repor t 2020 36 CHAIRMAN’S STATEMENT DELIVERING VALUE MSM OVERVIEW MANAGEMENT DISCUSSION & ANALYSIS GROUP FINANCIAL REPORT