Fraser & Neave Holdings Bhd Annual Report 2019

A N N U A L R E P O R T 2 0 1 9 03 Management Discussion & Analysis 053 ESTABLISHING OUR FOURTH PILLAR Recognising the need to do things differently to stay relevant, we have made the bold decision to develop dairy farming as our fourth pillar. We are in the process of acquiring 4,454 hectares of land in Chuping, Perlis to explore the upstream insourcing of fresh milk to support existing downstream production and distribution of fresh milk products. The aim is eventually to house 20,000 milking cows and produce 200 million litres of fresh milk per annum. For us, the farm would resolve the perennial issue of sourcing fresh milk while accelerating our presence in the liquid milk sector, where there is huge potential for growth. For the nation, it would go a long way towards ensuring fresh milk and dairy self-sufficiency. In addition, with our farm providing the readily available and more affordable milk, we believe we will be further enhancing the role we have adopted in helping to shape a healthier nation. The many benefits that the integrated dairy farm project will bring are set to further entrench our position as a 136 years old trusted and responsible corporate citizen. DELIVERING VALUE: GOING HEALTHIER & GREENER A key priority as we move into the future is to deepen our connection with consumers with products that satisfy their needs and aspirations as we step up our contributions to manage global environmental issues. We have a number of exciting launches lined up in FY2020, many that will expand our portfolio of healthier options. At the same time, we are investing into more green initiatives to minimise our carbon footprint – from installing a solar roof at our plant in Rojana to increasing the use of recyclable material in our packaging. Our goal is to eventually embrace a circular economy in which we prioritise renewable inputs, keep our products and materials in use, and recover all by-products and waste. We have already made a positive start in this regard through our school recycling programme. This financial year (11 th year of the School Recycling Programme), we achieved a marked increase in participation in the programme, with a quadrupling in volume of recyclable materials collected to 2.35 million kilogrammes across 13 states in Malaysia. We are proud of this programme and will keep growing it as we seek to enhance Malaysia’s overall recycling rate. SCALING UP E-COMMERCE/ DIGITALISATION After leveraging the online platforms of retailers such as 11street, Shopee, JOCOM and Lazada over the past few years, we are ready to take our e-commerce business to the next level. In FY2020, we will be launching F&N Life, our flagship online store and mobile application while setting up an e-commerce shop in T-mall, one of China’s biggest business to consumer (B2C) players. With the growing importance of social media, the ways we conduct our marketing activities, particularly the way we interact with consumers, will also evolve. Social listening is fast becoming another important channel, while one of the most important decisions in marketing is now in balancing funds allocation between the traditional and new media. Either way, we have to learn quickly, and embrace the change to achieve sustainability of growth, especially among the young consumers. ACKNOWLEDGEMENTS O ur successes to date are due to a large number of stakeholders. We value our shareholders for your trust in our ability to deliver sustainable returns on your investments. To our suppliers, distributors and customers, I would like to extend our appreciation for your steadfast willingness to share our vision. To our consumers, thank you for your continued support and brand loyalty. *** The many benefits that the integrated dairy farm project will bring are set to further entrench our position as a 136 years old trusted and responsible corporate citizen. *** Finally, my appreciation goes to the entire F&NHB family. I would like to express my gratitude to the Board of Directors for your wisdom and strategic counsel, and members of the management team for your tireless contributions. I especially like to take this opportunity to personally thank Mr. Tan Hock Beng, our Senior Director, Procurement and Special Projects and former Chief Financial Officer, who retires on 30 November 2019. Hock Beng has been with us for 18 years and has been instrumental in driving the overall dairy business growth. My deep appreciation also extends to Khun Karn Chitaravimol, who retired as Managing Director of F&N Dairies (Thailand) Limited on 1 April 2019. As for all our employees, terima kasih and khob khun krub for your hard work and commitment to our shared vision and objectives. We are on the cusp of some very exciting changes, and truly look forward to creating a better future for the company as well as our stakeholders with your continued support. Lim Yew Hoe Chief Executive Officer