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ANNUAL REPORT 2014
15
As highlighted earlier, the division’s profit grew significantly
from RM2 millions pre-tax loss in previous year to RM33
million pre-tax profit for the year under review. Revenue for
the year was RM321 million, a 22% increase compared to
previous year.
As at 30 June 2014, the group’s estimated plantable areas
stood at 69,873 hectares (Ha) spreading over 10 plantations
in Sarawak, of which 94% (or 65,681 Ha) are fully planted.
With 84% of planted area (or 55,438 Ha) having matured,
our FFB production for the year had increased by 15% to
766,469 metric tones (MT) from the previous year’s 666,899
MT. The average age of the trees is relatively young with only
23% of planted areas (14,918 Ha) in their prime.
The group’s palm oil mill produced approximately 69,000
MT of CPO and 11,000 MT of palm kernel (PK). There
are currently two mills in operation with total processing
capacity of 150MT per hour, while another mill with designed
capacity of 120MT is scheduled to be commissioned during
end of Year 2014. We plan to construct an additional mill
at the estimated cost of RM70 million with the aim to
accommodate the expected FFB production growth as the
palms mature. Upon full operation, the mills are expected
to contribute significantly to profitability.
Oil Palm Outlook and Strategy
As at 30 June 2014, the weighted average of our palm age is
still below 6 years. We expect our FFB yield (MT) per hectare
to continue to improve and consequently reducing our cost
of production. Labor shortage continues to be an issue
nationwide and we are no exception. In order to cope with
this challenging operating environment, we have increased
mechanization so we can optimize the deployment of labor.
We achieved a marked improvement in our Oil Extraction
Rate (OER) from our CPO mill operation due to our stringent
control over operation efficiency and FFB input quality. With
further fine tuning and the addition of a strategically located
new mill coming into operation, we expect production
volume and efficiency to improve in next financial year.
We remain optimistic about the long term prospects for the
palm oil industry despite current weakness in CPO price.
We will endeavor to lower our cost of production, enhance
our harvesting yield and improve productivity so that we
are poised to reap the profits in the event CPO prices start
to trend upwards.
Oil Palm
chairman’s statement (cont’d)