"Dear Stakeholders"

I am pleased to present to you, our sixth Integrated Annual Report and Audited Financial Statements of Kulim (Malaysia) Berhad for the Financial Year Ended 31 December 2019 ("FYE 2019")

the year 2019 can best be described as another challenging year for Kulim on the back of weak Crude palm Oil ("CpO") and palm Kernel ("pK") prices that have impacted the group’s profitability.

nevertheless, Kulim’s fundamentals remain strong as we have undertaken various group-wide initiatives to optimise the potential of our business segments. Our Oil palm plantation business continued to be the main contributor to the group, amidst a backdrop of volatile CpO and pK prices, european union ("eu") restrictions on the use of palm oil, high inventory levels and lower CpO export volume to major countries. these were further compounded by labour shortages and increasing labour costs, which continued to affect our operations.

On the financial front, we managed and addressed the various challenges which came in the form of fluctuating exchange rates, higher gearing, as well as the cost of capital to ensure that Kulim’s balance sheet remained firm and healthy. business conditions.

MANAGEMENT DISCUSSION & ANALYSIS

"Dear Shareholders"

The year 2019 could best be described as the year where Kulim proved its resilience in weathering the challenges that have continued to eclipse the palm oil industry.

THE OIL PALM PLANTATION SEGMENT REMAINED OUR MAIN CASH COW, CONTRIBUTING RM834.61 MILLION OR 69.04% OF THE GROUP’S REVENUE.

the year 2019 could best be described as the year where Kulim proved its resilience in weathering the challenges that have continued to eclipse the palm oil industry.

Overall, Malaysia’s palm oil industry saw CpO production increased marginally by 1.8% to 19.86 Million tonnes recorded in 2018. the increase was due to higher FFb processed, up by 0.5% arising from higher FFb yield which increased by 0.2%. better Oer performance, which was recorded higher by 1.3% to 20.21% as compared to 19.95% achieved in 2018 also contributed to higher CpO production.

in 2019, the prices of all oil palm products were traded lower. CpO price traded lower by 6.9% to RM2,079.00 per tonne compared to RM2,232.50 per tonne in 2018.