MANAGEMENT DISCUSSION & ANALYSIS REVIEW OF THE OPERATING ENVIRONMENT Financial year ended 31 March 2023 (“FY2023”) was a year of recovery for the global and domestic economies as the disruptive effects of the COVID-19 pandemic had begun to recede significantly worldwide. Restrictions on economic sectors and social activities were progressively removed and subsequently, regular business activities could resume to full or near full operational capacities, thus providing a much-needed lift to local economies. On the back of consistent recovery, in FY2022, global economic growth was restored to a positive trajectory, while the Malaysian economy expanded strongly by 8.7% in 2022 driven by the recovery in private and public sector spending. While the global and domestic economy had clearly improved, conditions were still challenging. The protracted Russia-Ukraine war had a major disruptive effect on the global economy, namely in the disruption of energy markets, raw materials and global supply chains. Crude oil and gas prices peaked at new record highs, which had a pass-through inflationary effect on the cost of many commodities, building, products and services. Together, with disrupted supply chains, steel bars, cement and other building materials saw significant cost increases in FY2023. The increased material costs has contributed to higher construction costs for property developers while these costs increments were unavoidable, Matrix, in response, initiated various cost containment and efficiency strategies towards protecting earnings margins and ensuring cost competitiveness amidst a recovering property market. Beyond rising material costs, labour scarcity and cost were also perennial challenges faced by the property sector in 2022 and going into 2023. The pool of skilled construction labour had decreased significantly during the height of the COVID-19 pandemic period of 2020-2022. The imposition of an intake freeze on new foreign worker recruitment (which was only lifted in the latter half of 2022) had also exacerbated the situation. The lack of skilled workers resulted in higher hiring costs as well as affected the progress of works and quality control management at construction sites. INTEGRATED ANNUAL REPORT 2023 MATRIX CONCEPTS HOLDINGS BERHAD 38 KEY MESSAGES
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