KUALA LUMPUR, June 17 (Bernama) -- Kumpulan Guthrie Bhd expects its crudepalm oil (CPO) production to increase this year but the financialperformance of its plantation sector will depend on prices of CPO.

"If the price is as what I would like it to be...our prospects will bedefinitely enhanced," said group chief executive Datuk Abdul Wahab Maskanat a press conference after the company's annual general meeting andextraordinary general meeting, here Thursday.

He said the price of CPO was down at the moment but there were prospectsthat it would rebound towards the year-end.

"We would be very happy if it can rebound to anything between RM1,700 -RM1,800. But we hope it will be rebound to more than RM1,800 - RM1,900,"he said.

"If the price goes down, the plantation unit can still perform better thanlast year, but not as much as the group had expected," he added.

The price of CPO has been experiencing a downtrend since last month andthe price for spot month July in the futures market settled RM3 lower atRM1,491 per tonne today.

Abdul Wahab said the downtrend was temporary and it was important not toreact to the "short term disturbance" in prices.

Compared with last year, the volume of production of CPO in Malaysia wasexpected to be slightly higher this year while its output in Indonesiawould also be higher, he said.

In Indonesia, he said Kumpulan Guthrie was aiming to boost the yield to 14tonnes of fresh fruit bunches per hectare from 11 tonnes last year.

It is also looking into ways to increase the hectarage of new plantingsthis year, targetted at 4,000 hectares.

Last year, the group had a total of 151,024 hectares of mature palms and11,728 hectares of immature palms in Indonesia, whose total was higherthan in Malaysia where the group had 73,214 mature hectares and 27,237immature hectares.

Abdul Wahab said Kumpulan Guthrie was having a dedicated plantationdevelopment board committee for its Indonesian operations to improve theirperformance and achieve better potential.

"Indonesia, as an investment destination, has got some other operationaland environment issues that are constantly on the move and very dynamic.The flavour is definitely not the same as in Malaysia," he said.

"For this year, our board of directors have looked into the Indonesianoperations with more focus and with more emphasis on how to improve theirperformance," he said.

Abdul Wahab said the group had a long way to improve its Indonesianoperations as the profit per mature hectare in 2003 was RM1,037, up fromRM778 in 2002, but it was still lower than in Malaysia where it recorded aprofit of RM2,663 per hectare against RM1,226 in 2002.

Kumpulan Guthrie's plantation operations in Indonesia are held through PTMinamas Gemilang and PT Anugerah Sumbermakmur which collectively holdbetween 50 and 100 percent interest in 24 Indonesian plantation companies.

On the timing of the listing of the Indonesian plantation unit, AbdulWahab said it would depend on a lot of factors.

"Before that (listing) can happen, we need to put things in proper orderto really add value for the listing. The numbers (financial performance)and business operations must improve, and corporate governance must bestrengthened because all these factors are relevant to investors," heexplained.

"Timing becomes a secondary issue, the most important is the substance,"he stressed.

In the future, he said Kumpulan Guthrie was considering looking atundertaking market intelligence on the downstream sector such asolechemicals on a regional and global context.

On property development, Abdul Wahab said the group would strengthen itsposition not just in houses but also in other forms of the propertybusiness.

"We hope to be big in this in the context of being regional name," he saidwithout elaborating.

"If we really are in the business of property, then we will have to lookat the whole band of the value chain that will give us the maximumbenefits over a period as well as at the appropriate opportune time," hesaid.

The group the group's property arm is expected to contribute significantlyto its bottomline following the rationalisation of the Kumpulan Guthrie asthe unit will manage about 10,000 hectares of freehold land, of which8,000 hectares are in the prime Klang Valley/Sepang area.

Kumpulan Guthrie's rationalisation exercise would be completed inSeptember or ealy October, said Abdul Wahab.

He also said the Guthrie Corridor Expressway was not a core business forthe group and it was in the process of valuing it before its board ofdirectors decided on its future direction.

Some parties had written to the group to buy over the expressway whichwould commence toll collection next year, he said.

-- BERNAMA