MSM eyes higher sugar export

  • Corporate News
  • Wednesday, 17 Jun 2020

KUALA LUMPUR (Bernama) -- MSM Malaysia Holdings Bhd (MSM) has secured 200,000 tonnes of sugar products export for this year, said group chief executive officer Datuk Khairil Anuar Aziz.

He said the company was also targeting to increase sales penetration and boost exports up to 350,000 tonnes of sugar products for the 2020 financial year (FY20).

"This is expected to contribute close to RM600 million in revenue to the group,” he said in a statement released after the company’s 9th Annual General Meeting held online today at Wisma FGV.

"As of May 2020, the company has exported more than 73,000 tonnes of refined, liquid sugar and fine syrup, with an estimated revenue of about RM157 million," he added.

MSM has managed to hold its ground amidst a challenging FY19, thanks to several initiatives in its turnaround plan.

Impacted by intense price competition, far lower refinery utilisation, weak average selling price (ASP) of sugar, higher finance cost, and decline in export values, one of the company’s strategies was to diversify the commercialisation of its MSM Sugar Refinery (Johor) Sdn Bhd (MSM Johor) in April 2019.

Khairil Anuar said the strategy implemented in the second half of FY19 to maximise the potential of MSM Johor involved an aggressive product diversification plan into premix, liquid sugar and fine syrup, to cater to industrial demand in the Asian region.

"The product diversification into the non-refined sugar segment includes value-added sugar products and the anticipated entry into new healthier variants in the second quarter of FY20.

"This is expected to bolster our earnings and increase capacity utilisation in MSM Johor," he said.

Meanwhile, he said MSM Johor has reached its highest utilisation rate at 34 per cent since April 2019 and this was expected to increase further with the growth of domestic and export demand, as well as the group’s rationalisation plan to consolidate its production capacity.

"The rationalisation of operations from Perlis to Johor, announced recently, will reduce the risk of supply disruptions significantly and reduce operational and refining costs.

"At the same time, MSM has also been working closely with its parent company, FGV Holdings Bhd (FGV) to maximise the potential in MSM’s assets in Chuping, Perlis," he added.

The move involves the development of a new agriculture growth area called FGV Agro Food-Valley, which is expected to contribute towards the national food agro sector, whilst enhancing the local socio-economic landscape that include business and employment opportunities.

The company’s current focus on diversification includes possible collaborations with reputable food and beverage players and downstream product development such as flavoured syrup and condensed milk.

"MSM also seeks to expand its global footprint to the Middle East and North Africa (MENA) region," Khairil Anuar said.

MSM posted a total revenue of RM2.0 billion for the financial year ended Dec 31, 2019 (FY19), a nine per cent reduction compared with RM2.2 billion previously.

It recorded a net loss of RM299.77 million, further strained by a combination of factors that included commercialisation of MSM Johor and loan modification cost of RM26 million.

In addition, assets impairment of RM139 million further impacted the MSM's financial performance in FY19.

"The steady improvement in ASP and total sales volume has resulted in Group revenue increasing by five per cent in first quarter of 2020 (Q1 2020), compared to the same quarter last year; the improvement corresponds to the increase in selling price since October 2019 and the export of newly launched products.

"In addition, due to the implementation of the ‘Just-in-Time’ mechanism in January 2020, we also managed to reduce 30 per cent of total raw sugar volume purchased in Q1 2020 compared to the same quarter last year," the CEO added.

According to him, the previous lock-in contract that expired in December 2019, has allowed MSM to strategically manage its raw sugar procurement to enhance cash flow and reduce storage cost.

Moving forward, he said MSM would continue to prioritise and focus on cost saving initiatives and enhance operational capabilities to attain balance on three fronts - operations, cash flow and production, and seek opportunities to extract and create greater value for shareholders.


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