Ra­tio­nal­i­sa­tion ex­er­cises to sell non-strate­gic, un­der­per­form­ing as­sets have started to bear fruit

New Straits Times - - Business -


TH PLAN­TA­TIONS Bhd fore­sees po­ten­tial rev­enue up­side this year fol­low­ing plans to dis­pose of a few non-strate­gic and un­der­per­form­ing as­sets worth RM150 mil­lion.

Chief ex­ec­u­tive of­fi­cer Datuk Seri Zainal Azwar Amin­ud­din said the ra­tio­nal­i­sa­tion ex­er­cises had started to bear fruit and the pro­longed bear­ish phase was over.

The com­pany aims to pare down gear­ing level to 0.47-0.5 times this year.

“About 60 to 65 per cent of our ma­ture area is made up of young and prime es­tates, with more com­ing into ma­tu­rity in the next few years, promis­ing a steady rev­enue growth and higher yield­ing pat­terns to­wards 2025 and be­yond. Only five per cent of our plan­ta­tion is con­sid­ered old.

“We ex­pect 10 per cent higher fresh fruit bunch pro­duc­tion at 841,000 tonnes com­pared with last year. Crude palm oil prices are ex­pected to nor­malise to sus­tain­able lev­els of be­tween RM2,500 and RM2,700 a tonne.

“We would con­tinue with our ra­tio­nal­i­sa­tion ex­er­cises to keep our gear­ing level down to main­tain good earn­ings mar­gin level and this in­cludes dis­pos­ing of non-core, non-strate­gic and non­per­form­ing estate as­sets,” he said at the com­pany’s an­nual gen­eral meet­ing, here, yes­ter­day.

The plan­ta­tion arm of Lem­baga Tabung Haji, how­ever, is well aware of in­dus­try chal­lenges, in­clud­ing higher pro­duc­tion in­puts and labour costs.

On the back of its ra­tio­nal­i­sa­tion ex­er­cises, its oil palms now have an av­er­age ma­tu­rity age of 12 years, but Zainal said TH Plan­ta­tions aimed to bring the age pro­file down to 10 years.

The com­pany sold 2,819.27ha of oil palm estate land in Ne­gri Sem­bi­lan as well as a palm oil mill for RM152 mil­lion last year to pare down debts.

As a re­sult, it recorded 137 per cent in­crease in profit af­ter tax and mi­nor­ity in­ter­ests in its fi­nan­cial year ended De­cem­ber 2016 to RM147.1 com­pared with the same pe­riod a year ago.

About 60 to 65 per cent of TH Plan­ta­tions’ ma­ture area is made up of young and prime es­tates, with more com­ing into ma­tu­rity in the next few years.

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