Kuala Lumpur: There is likely to increase in sugar sales volume for the financial year 2024 (FY24) as per the MSM Malaysia Holding Bhd as the company plans to increase its base in regional markets with higher selling prices, reported The Sun.
Following a growing demand in both domestic and export markets, MSM Malaysia is focusing on exporting around 300,000 tonnes of sugar to neighbouring countries.
Group CEO Syed Feizal Syed Mohammad highlighted a significant shift in the company’s export strategy. “The primary markets for this year will be Indonesia and China, driven by expected deficits in those regions. We also foresee positive growth in other destinations such as Singapore and South Korea,” he told SunBiz.
Syed Feizal also addressed the impact of lower trending raw sugar prices in Brazil, currently influenced by favourable production forecasts. He projected the NY11 price to range between US$18.50 to US$21.00 (RM86.60-RM98.30) per pound. “All eyes will now be on the weather patterns in Centre-South Brazil, the world’s largest cane-growing region,” he added.
To mitigate potential cost and margin impacts, MSM Malaysia has hedged 94% of its raw sugar requirements for the wholesale segment at a rate below the market average for FY24. As per Syed Feizal, if there were to be any kind of increase in the NY11 prices, it would naturally have a clean flow-through to the customers and not affect the margins of the company.
MSM Malaysia refines sugar at its complex in Chuping, Perlis, through its subsidiary MSM Perlis Sdn Bhd using raw sugar supplies from Brazil, Australia, Thailand, and India. Syed Feizal highlighted the ongoing management of risks arising from high input expenses related to the price of raw sugar, freight costs, natural gas prices, and ringgit fluctuations with careful hedging tactics and pass-through pricing mechanisms.
The outlook for sugar prices is that the industry is eyeing normalization this year, with overall profit margins seen to improve, according to Syed Feizal. He also shared that MSM Malaysia has been in discussions with the government about reviewing the ceiling price for the wholesale segment in light of rising input costs.
“Meanwhile, MSM Malaysia has also engaged our key suppliers on mechanisms to mitigate the impact. While awaiting the announcement of a new price mechanism, the industry will continue to receive an RM1 per kg incentive, with MSM Malaysia entitled to 24,000 tonnes per month. Concurrently, MSM Malaysia is also adjusting its average selling prices for industry and export customers to maintain normalized margins,” Syed Feizal explained.
MSM Malaysia’s flagship product, Gula Prai, has maintained a domestic market share of over 60% and boasts a penetration rate of 67.2% among Malaysian households. Nielsen’s reports for hypermarkets, supermarkets, and chain stores for 2021 and 2022 indicate that Gula Prai remains the leading white refined sugar retail brand in Malaysia.
