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Wednesday, May 28, 2014

TH Plantations to focus on consolidating operations


KUALA LUMPUR: TH Plantations Bhd will this year focus on consolidating its operations after it recorded a healthy bottom line growth from acquisitions in the financial year ended Dec 31, 2013 (FY13), according to chief executive officer Datuk Zainal Azwar Aminuddin.
“The acquisition has augured well for the company and has resulted in a 49% growth in our fresh fruit bunches (FFB) production in FY13 compared with FY12. When we acquired a plantation that is double our size in greenfields and brownfield ones, this impacted our finance costs,” Zainal said after the company’s AGM yesterday.
He said the company would like to remain prudent at this juncture and that its gearing was at an acceptable level today.
“The challenge now is to produce enough to sustain our growth to mitigate the amortisation and finance costs.
“Upstream plantations are a volume game and we will have to improve our yield performance further – we achieved 23.86 tonnes per ha last year,” he said, adding that the company’s yield outlook for FY14 was to achieve 22 tonnes (per ha) average. Growth will be seen mainly from its fields in Sarawak.
“Sarawak will contribute to some 44% of the total production of our plantations this year. And by 2017 this will grow to 66% in terms of contribution to the company; (while) we also target 1.3 million tonnes of (total) FFB quantity then,” he added.
The company had seen its land bank ownership growing by seven times today to 109,000ha compared with the year it was listed in 2006 at 15,000ha.
It is also allocating RM105mil for capital expenditures in FY14 mainly to build a palm oil mill in Bintulu, Sarawak, that is expected to be complete at the end of two years.
Meanwhile, he also said that the anticipated El-Nino dry weather would see its direct impact on its fruits and yields should it come to pass.
“We would likely see forced ripening (of fruits) and an immediately lower production of crude palm oil. While the major impact would be felt in the year 2015 and 2016. We expect a significant impact of about 10%-15% down (in output),” he said.
“The dry weather would also impact the formation of the fruits which would take at least 12-24 months when we will see the impact.”
Shareholders at its AGM yesterday approved all resolutions for the company including its dividend of 3.62 sen per share that represented a 50% payout of its FY13’s net profits.

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