ANOTHER Sarawak timber and oil palm company has invested heavily in the oil palm industry.

Public listed Jaya Tiasa had for its financial year ended April 30, 2009 spent RM173 million to further improve its oil palm division.

Its chairman Gen(Rtd) Tan Sri Abdul Rahman Abdul Hamid said the group now had a land bank of 83,483 hectares, of which 68,483 was estimated to be arable.

“Our total planted area has increased by 26 per cent to 43,558 hectares from the 34,531 previously.

“Of this, approximately 17 per cent or 7,595 hectares are mature oil palm,” he said in his report to the group annual general meeting here tomorrow.

He said for the year under review, the oil palm division had recorded RM44 million or a 20 per cent increase in revenue from the sale of fresh fruit bunches (FFB).

This is despite the highly volatile crude palm oil (CPO) price movement and challenging market conditions.

He also disclosed that the division’s share of contribution to the group profit before tax had increased from 28 to 53 per cent.
“Our FFB production is projected to increase further over the next few years from additional areas coming into maturity and a higher yield expected from the palm trees at their more productive age,”he explained.

Abdul Rahman highlighted that the group now had its first CPO mill in Pulau Bruit in the Sarikei Division.

“Completed in March this year, it is strategically located to keep logistics costs low and facilitate timely delivery.

“It can process 45 metric tonnes of FFB per hour but is expandable to 90 metric tonnes, in anticipation of higher and better harvests in future from the surrounding plantations of the group,” he said.

For the year under review, Abdul Rahman said group revenue decreased from RM794 million in the previous year to RM757 million — a five per cent reduction.

“Lower selling prices together with higher operating costs led to an erosion in group profit after tax to RM14.6 million from the RM52.5 million attained the preceding year.

“As a result, earnings per share was down to 5.20 sen, while net tangible assets per share stood at RM3.80,” he said.

He said an overview of the current financial position highlighted that the group had applied a balanced mix of equity and long term debt capital to finance a total assets base of above RM2 billion.

Touching on the group’s reforestation activity, he said it was currently developing three licensed forest plantations, over a total land area of 235,859 hectares in the Kapit Division.

“To date, we have planted 26,007 hectares, with the average survival rate of the seedlings at 90 per cent.

“The main species planted are Eucalyptus Deglupta, Eucalyptus Pellita and Kelampayan,” he said.

On its plywood division, Abdul Rahman said the financial year 2009 had been a challenging one with demand falling in response to weakening global economic conditions.

He said the group sales volume was 14 per cent lower than that attained in the previous financial year.

“But on a brighter note, two of our subsidiaries have renewed the prestigious Japan Agricultural Standard Certification awards, paving the way for a consolidation of the premium position in the Japanese market.

“In addition, we are pleased to highlight that the group plywood division had on October 30, 2008, successfully obtained the California Air Resources Board(CARB) certificate,” he added.

He said this meant it had complied with the formaldehyde emission limit as stipulated in the California Code of Regulations.

“This will give us a competitive edge in the United States market and allow us to export a higher volume to North America,” he added.

Abdul Rahman said the logging divison, despite facing a very challenging operating condition, had continued to perform well by contributing to a total revenue increase of four per cent although total log production was 11 per cent below that of the previous year.

On the group’s future outlook, he said it believed that the significant stimulus packages announced by many major countries, would provide some form of support for commodities including wood products.

According to Abdul Rahman, the general outlook for the timber industry remained a challenging one, as consumer sentiment was affected by the existing economic uncertainty.

“We expect a much slower pace in revival of demand and pricing for plywood based on the severity of the existing economic turmoil in Japan, the main global market.

“However, log prices should remain resilient due to limited supply,” he said.

For oil palm, he said CPO prices were expected to stabilise at a reasonable level due to factors such as the positive growth in palm oil consumption in China and India, the better acceptance of palm oil and rising demand from the renewable energy sector.
“With this in mind, we are optimistic of a favourable outlook for the palm oil industry in the long term,” Abdul Rahman said. Source : Business Times

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