TH Plantations to revive replanting scheme with higher CPO prices

KUALA LUMPUR: After going through a rather volatile year in 2016, TH Plantations Bhd says it is optimistic about reviving its replanting programme in the first half of this year, after deferring it for a year.

Chief executive officer Datuk Seri Zainal Azwar Aminuddin said the company would start replanting about 5% of the total 105ha of oil palm acreage now that crude palm oil (CPO) prices are in the region of RM2,800 to RM2,900 per tonne.

“We have deferred our replanting exercise for a year because of the poor CPO prices last year. But with the current prices, we are confident of reinstating the exercise in the first half of this year,” he said when met during the 28th Global Palm Oil and Lauric Oils Conference in Kuala Lumpur yesterday.

He said yield recovery would come from the current planted prime areas and new areas that had matured.

“We anticipate a yield of 12% to 15% higher than last year,” he noted, adding that this is the result of TH Plantations’ extensive replanting exercise carried out since 2009.

The company’s net profit in the fourth quarter ended Dec 31, 2016 almost tripled to RM127.46mil from RM44.22mil, a year ago, driven by the sale of its wholly-owned unit THP Gemas Sdn Bhd for RM154mil during the quarter.

Its quarterly revenue rose 31.5% to RM170.08mil from RM129.33mil. The company declared a final dividend of 6 sen per share amounting to RM53.03mil for the financial year 2016 (FY16).

Zainal said the company hoped to achieve 10% production growth this year.

“The worst is over for the palm oil industry since production and fresh fruit bunch (FFB) yields were impacted due to the El Nino phenomenon in 2015.

“We are talking about good recovery and for TH Plantations, we have sizeable prime (mature) areas that will provide a stream of revenue from FFB production,” he added.

On whether the company would be consolidating its mills and refineries in efforts to pare down its debt, Zainal said the company had no such plans and was comfortable operating the seven mills.

TH Plantations has 39 estates in Malaysia and Indonesia, and its seven mills operate at a capacity of 250 million tonnes per hour.

With better CPO prices ahead, Zainal said the company was expecting utilisation rate of over 60% in 2017.

The focus overall for TH Plantations this year would be to reduce its gearing level from 1.75 to 0.5 times and possibly have an early redemption of its sukuk.

In 2015, TH Plantations, via a special-purpose vehicle THP Suria Mekar Sdn Bhd had issued RM1bil of sukuk murabahah to its parent to meet capital requirement purposes. TH Plantations shares closed up 1 sen or 0.83% at RM1.22 yesterday. –