MAINTAINING MARKET LEADERSHIP Within an environment of escalating costs, MSM’s priority for FY2021 was to secure our raw sugar for the year at the lowest possible price to help maximise the Group’s profit margins. Raw sugar pricing and hedging are guided by the Trading Committee which is tasked with monitoring the current global sugar situation and MSM’s hedging positions of our raw materials namely raw sugar. The Trading Committee meetings are convened weekly throughout the year towards better, faster and more informed decision making. The absence of exports subsidy in India, logistical disruptions due to the pandemic and continued adverse weather conditions in other major sugar producing countries are expected to exacerbate the current global raw sugar deficit outlook and buoy the NY11 price further. NY11 Raw Sugar Price STRIVE FOR CONTINUOUS GROWTH The process of raw sugar procurement is closely governed by our Group Trading Policy which is approved by the Board and aligned with relevant standard operating procedures. The main challenge managing the volatile global raw sugar prices to procure the lowest possible price of raw sugar for the Group. To this end, MSM will continue with the current hedging methods in which all sales under the Industry and Exports are hedged back-to-back with the current price of raw sugar. Various pricing mechanisms were explored during the year to better manage the volatility and reduce the price risk exposure moving forward. MSM has also entered into contracts of Brent Crude Oil options as a hedging mechanism against the increasing gas prices. ACHIEVING OPERATIONAL EXCELLENCE MSM’s established Just-In-Time mechanism continues in being a key contributor to improve the Group’s profit margins by maintaining minimal raw sugar stockholding, lowering raw sugar financing cost and reducing freight as well as reducing external warehouse rental expenses. Sustainability Step-Up MSM and Wilmar Sugar International Pte Ltd (Wilmar) have come to an agreement on sustainable raw sugar supply through Wilmar’s updated No Deforestation, No Peat, No Exploitation (NDPE) policy. This ensures continuous commitment towards a supply chain free of deforestation and conflict. Wilmar will start the supply of sustainable raw sugar in FY2022. 2021 March February April May June July August September October November December 2022 SUSTAINABILITY JOURNEY HOWWE ARE GOVERNED FINANCIAL STATEMENTS ADDITIONAL INFORMATION 79
RkJQdWJsaXNoZXIy NDgzMzc=