Annual Report 2020

However, recently theWorldBankand IMFrespectively revisedMalaysia’s GDP 2020 forecasts to 3.1% and 3.8% contractions. As businesses are affected, the effect will be felt throughout the organisation. Beltswill be tightened, jobsbecomescarcer, andsalaries stagnate. Socioeconomically, Malaysia is experiencing its highest unemployment rate in twodecadesat 5%, whichcould rise further up to 7%. Employment levelsand incomeavailabilityaffect consumerspending. Throughout theMCO, consumer spending halved inmost categories, except food&beverage, communicationsandeducation. ADepartment of Statistics Malaysia (DOSM) survey found the average monthly household expenditure fell 55% while total household expenditure, excluding non-consumption expenses e.g. loans, savings, income tax deductions, contributions to theEmployeesProvident Fund (EPF) and Social Security Organisation (SOCSO), dropped 48%. Lookingat 2020 thus far, it is shapingup tobe ahistorical year. Interest rate is at an all-time lowand the overall business environment is very challenging. Being a producer of agro-based nutritious products that nurture the body, QL is in a resilient business. We are confident that we are well- placed tomeet thedemands of themodernpopulation seekingquality food and convenience. Since the start of COVID-19 and announcement of theMCO, weworked closelywith the authorities to ensure business continuity and thatweareable to contribute to thenationby up-keeping the production of essential food item for the masses. Our business is considered an essential service and is allowed to operate with conformity to strict SOPs. While demand may vary due to in-country situations and capacity under utilisation due to supply chain disruptions, we continue to be a vital cog in nations’ food supply. AswegearourMPMbusiness toweather theuncertainties inaquaculture activities, theweak ringgit plays intoour favour especially in theexport market, where surimi and surimi-based product price is expected to be stable. With FFB production increasing, CPO prices expected to be on the mend and forex translation loses reversed, POA is looking forward to a year of mildly fertile returns. These two positive expectations help to shield the overall QLbusiness fromtheweight of thecontinuingcycleof eggoversupply andbiosecurity threats,whichcauseserraticeggprice inPeninsularMalaysia topersist. This oversupply situation is less severe in other markets and on the trading side, business is expected tomaintain its volume andmargin. With MPM and POA targeted to be slightly positive whereas ILF is moderately negative, we believe there is a fair chance for QL to deliver anoverallmarginally positive year. QL is committed tostrive for another year of growth in FY2021, barring any major unforeseen events. Wewill continue to play our role in supportingMalaysia in its efforts to recover from the impact of COVID-19 and MCO. As we come together witheveryMalaysian, wecan risestronger fromthecurrent challenging situation. Information Technology (IT) QL undertakes regular IT risk assessment and follows throughwith theprescribedaction plansasmeasures tomitigatenetworksecurity, data protection and cybersecurity risks. QL is in theprocessof implementingacybersecurity risk framework. QL’s IT preparedness has enabled the Group to continue its operations with minimal disruption during the sudden MCO period. Financial QL’s business transcends Malaysianmarket and shores and thus, forex movements can potentially impact our earnings. Hedging, internal control processes and close monitoring of the market are employed to mitigate financial risks. Halal Any itembearinganauthentichalal certification informs and gives Muslim consumers the assurance that the products are prepared in accordance to Islamic laws. A holder of halal certification from JAKIM, QL is cautious to safeguard the trust earned,maintaining strict compliance and remain sensitive to religious needs. Our commitment is emphasised by a teamof dedicatedhalal executiveswhomonitor and supervise all processes and procedures from ingredients to packaging. TRENDS AND OUTLOOK In the fallout from the pandemic, the International Monetary Fund (IMF) predicts the global economy to contract by 4.9% in 2020. TheWorld Bank is even less optimistic, opining a baseline 5.2% contraction in global gross domestic product (GDP) this year. Prolonged tensionsbetween theUnitedStates andChinacanbedamaging toaworldeconomy struggling to recover fromCOVID-19 and risk slowing important technological innovations. Malaysia’scentral bank, BankNegaraMalaysia (BNM), cast abrighterprojectionof thecountry’s GDP growth between -2% to 0.5% against a highly challenging global economic outlook. BNM states that apart from the pandemic, domestic economy will be affected by the sharpdeclineandshifts incrudeoil pricesand continued supply disruption in commodities. A Milestone on Our Sustainable Growth Journey 37