Outlook for Marine Product Manufacturing Activities (MPM)
MPM operations achieved a higher profit of RM39 million (up 16%) against revenue of RM273
million (up 11%). The improvements are mainly due to higher contribution from surimi-based
products and higher surimi prices.
In order to further improve our earnings and operational efficiency, we are allocating about
RM100 million over the next two years mainly to upgrade factory operations, conversion to
biomass plant, and building deep sea vessels. We have also put in place plan for expansion
into nearby regional countries.
The recent increase in diesel prices has increased the cost of doing business but with
rebates, the industry remains competitive compared to our neighbouring countries and we
are confident of maintaining our margins.’
Outlook for Integrated Livestock Farming (ILF)
ILF operations achieved a profit of RM47 million (up 37%) against revenue of RM732 million (up
11%). The improvements are mainly due to better margins from farm produced and raw
material trade.
In the midst of escalating cost, this division has proved its resilience by passing on costs and
maintaining its margin and it also shows its growth potential.
In these challenging times, we view the current economic climate as opportunity rather than
threat especially so with many weaker players facing working capital constraints and
inefficiencies. The industry is currently ripe for consolidation and rationalisation. There are
many opportunities for acquisition.
We have recently acquired Heap Loong Poultry Farm Sdn Bhd (based in Kulim, Kedah), a
poultry egg producer with output of 330,000 eggs per day. With this acquisition, total group
egg production is about 2 million eggs per day.
For the next two years, we have budgeted capital expenditures of RM120 million for ILF
activities. We are looking at increasing our production capacity in integrated farming involving
breeder farm, feedmilling and broiler farming in East Malaysia.
Our integrated farming project in Tay Ninh, near Ho Chi Minh, Vietnam has also received
clearance from from relevant authorities. We are working forwards duplicating our ILF activities in Vietnam.
Outlook for Palm Oil Activities (POA)
POA Activities achieved a profit of RM10 million (up 6%) against revenue of RM 302 million (up
40%). 2008 has not been a good year due to milling margins continuing to be squeezed by
lower OER (Oil Extraction Rate) due to exceptionally high rainfall in East Malaysia as well as
competition for FFB supplies.
With only two CPO mills and 3,000 acres (of various maturity) all these years, the contribution
is mainly from CPO milling. However, on the brighter side, going forward, the 3,000 acres of
our own plantation should be fully mature and expect to give significant contribution in 2009
given the current high price of CPO.
Our Indonesia Oil Palm plantation is currently developing very smoothly. We have already
planted 7,000 acres as at 30th June 2008 and our current planting program is about 10,000
acres per year and by 31st March 2011, we should have completed planting 35,000 acres of
plantable areas. With this planting program, we see significant contribution from this division
in financial year ending 31st March 2012.
Also in this division, we are looking actively on how to unlock and create further value in the
area of palm biomass.
