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 061 • Improve production capacities and operational efficiencies enhancing resource utilisation for better economies of scale. • Reducing cost of operations: maximising returns and value for shareholders. • Higher sales and revenue from product range expansion and portfolio diversity through more healthier options, differentiation in packaging format and growing into adjacent categories. • Improvement in product quality and product packaging that meets both customers’ needs and international food safety standards. • Reduce packaging material usage thus lowering carbon footprint and packaging costs. • Consumer-centric innovation helps to increase competitive advantage. • High investment costs in R&D, Equipment and Machinery – uncertain commercial returns. • Innovation can lead to streamlined processes which could result in employee redundancy. • Balancing between the risk of non-acceptance by consumers and the risk of being overtaken by competitors if R&D and consumer acceptance evaluation (gestation period) were too long. • Replication and improvement by competitors riding on products, processes and packaging of innovator. • Reputational risk and customer claims arising from break of supply chain or compromised packaging outside of factory. • Potential adverse Financial and Brand Reputation Risks. • Ensure competitive pricing from vendors/suppliers in a timely manner. • Inculcate best practices and ethical business conduct by both vendors/ suppliers and employees. • Ensure Sustainability of business and compliance with food safety regulations and standards. • Reduce Cost of Logistics and minimising environmental footprint. • Create local employment and support local economy: 90% of suppliers are local. • Promote sustainable agriculture principles & practices – safeguarding a green environment for well-being of society. • Potential of abuse and non-conformance to policies in place. • Commodity prices affected by supply and demand as well as weather conditions. • Non-compliance of materials sourced to food and safety regulations and standards. • Ability of local suppliers to deliver and meet growing demands. • Supply of CSPO unable to meet global demand. • Price fluctuation as a result of global economic performance and foreign exchange exposure. OPPORTUNITIES RISK