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ANNUAL REPORT 2014
13
The logging division contributed about 34% of the total
Group’s revenue. Apart from the unfavorable weather
conditions as well as the impoundment of the Bakun
hydroelectric dam which continued to impede the
transportation of logs for processing mills and exports,
supply chain issues made our logging operation a bigger
challenge. As a result, our log production reduced by 0.8%
in terms of volume compared to the last financial year.
Average export price for logs increased to USD232 per m3
largely due to the tightening log supply and the continuing
sustained demand from India and Taiwan.
India remained the largest log export market for the group
with sales accounting for 62%of the Group’s total log export
sales in US Dollars. The strengthening of Indian Rupee
against USD has helped Indian importers to keep pace
with the momentum on importing logs to feed domestic
demand. India is expected to continue to be a key market
for the Group’s logs.
Taiwan was our second largest export market after India,
amounting to 20% of total logs sales in US Dollars. Despite
an overall shrinkage demand from Taiwan due to continuing
shutdown of sawmills, the Group expanded total sales
volume of logs to Taiwan.
Logging Outlook and Strategy
Jaya Tiasa has one of the largest timber assets among
Malaysian listed companies. We will continue to export all
good quality logs in the coming financial year as we foresee
the market demand for tropical logs to remain robust despite
an expected slower global growth at prices that are likely to
be sustained due to supply constraint.
In particular, demand for logs in India is expected to continue
to be maintained. With its new government already busy with
plans for economic revival, activities in the housing sector
are expected to be high. The need to address infrastructure
deficiencies and developments in second and third tier
towns should sustain demand and augur well for the Group.
To better manage our forest, we will select good quality
species with high market value for harvesting. We shall
maintain our strategy to export all available logs within the
permitted quota and maintain vigilant controls on the cost of
production. Increased attention will also be given to logistical
planning to ensure that logs extracted are delivered within
the shortest time frame possible to preserve their freshness
and maintain their quality for premium prices.
DIVIDEND
As part of our commitment to enhancing shareholder value,
the Board of Directors stayed true to its dividend policy of
paying out not less than 20% of its net profit, subject to not
compromising the Group’s ability to support its pursuit for
long term growth. As a result, the Board of Directors has
recommended a first and final single-tier dividend of 1.5
sen per share representing about 26% of after tax profit
in respect of the Financial Year Ended 30 June 2014 for
approval by the shareholders at the forthcoming Annual
General Meeting to be held on 27 November 2014.
REVIEW OF OPERATION
Logging
chairman’s statement (cont’d)