Page 42 - HRC_Annual_Report_2023

40 About HRC Value Creation Management Discussion Leadership
& Analysis

FY2023 STRATEGIC REVIEW

STAKEHOLDER VALUE

The sustainable value delivery focus for the year centred on supporting the smooth and successful completion of TA 2023.
This ensures resilient and proactive compliance with governing procedures and regulations, while we continue on our journey
to optimise HRC’s supply chain activities and implement cost optimisation strategic initiatives.
Mindful of oil price volatility, geopolitical tensions, and to ensure the requirement for TA 2023 purchases are met,
we worked to optimise HRC’s supply chain activities and implemented more cost saving as well as cost optimisation
strategic initiatives. These included engaging a wider selection of vendors, implementing proper cost controls,
improving negotiations and staying agile and responsive in protecting our margins. Outside of operations, we remained
committed to be socially responsible in our business affairs and make a positive contribution to our local community through
better engagements and long-term social investment.

Strategic Initiative 1
Drive overall product value improvement initiatives in the third quarter. The production plan was in sync with
this movement. We continued selling combined cycled oil
In the first half of 2023, China’s reopening effect on the market
and the recovery of domestic demand within China, reduced (CCO) with a nimble quality price escalator and de-escalator
export volume to the east. We imported 41.7kt residue in formula to favourably reflect CCO value when pooled as
the first quarter of 2023 by producing more mogas for HRC fuel oil while still providing a viable optimisation room to
in view of strong mogas cracks. We continued maximising capture the gains from higher CCO processing into gasoil
high gasoil yields crudes to capture the high gasoil value. 10ppm in actual daily operations. Subsequently following
Other key initiatives taken to increase overall product value poorer mogas crack in the last quarter, we ran the LRCCU
include maximising the product cut corresponding to the at lower run rates to minimise mogas production and kept
cracks level. For instance, mogas was strong particularly in maximising middle distillates production throughout 2023.
the first two quarters of the year, while jet started to pick up

Strategic Initiative 2

Enhance supply chain quality, reliability and efficiency We will continue to explore international vendors of good
quality and high reputation yet offering competitive pricing.
HRC is committed to supporting local businesses and has
made a tangible impact on the community, contributing to Other initiatives to enhance the supply chain operations
its growth and sustainability. During TA 2023 we prioritised include closely monitoring contract status by initiating
the selection of local vendors wherever it made sound inter-department collaborations; negotiating with current
business sense. However in our operations, sourcing the contractors for cost savings; sourcing substitutes of equal
right vendors and having a diversified supply network effectiveness but lower price; improving warehousing stock
benefits HRC as an operating entity in the long run. accuracy to 98% through the cyclical counting method
In recent years we have explored contracts with a wider of checks and balances; and targeting on time delivery by
market to ensure the most competitive market contracts working closely with end-users.
are obtained while meeting our quality expectations and
sustainability standards. Suppliers from new markets such
as South Korea, Japan, and Germany, Swiss and China have
been added to our pool in seeking the best deals for HRC. For more details on our Supply Chain Management, please refer
to pages 38 and 39 of our Sustainability Report 2023.
Strategic Initiative 3

Continuous engagement with stakeholders we actively collaborated with local government bodies
and communities, ensuring that our operations align with
HRC remains committed to community well-being and
environmental stewardship. Our initiatives reflect our environmental safety standards and meet community
dedication to transparency, safety, and collaboration, aligning expectations. These efforts were aimed at fostering trust and
with both regulatory requirements and the expectations of building an ongoing dialogue with the community.
our valued fenceline communities. Throughout FY2023,