PPB Oil Palms eyes more land purchases in Indonesi
Friday May 14, 2004PPB Oil Palms Bhd is eyeing the acquisition of an additional 30,000ha inIndonesia, especially in Central Kalimantan, this year as part of anongoing expansion of its oil palm plantation, said executive chairman TanYew Jin.
He said that to achieve higher economies of scale, the group would try toacquire more land, especially in areas surrounding its existingplantations in Kalimantan.
To this end, the company was talking to several parties while awaitingoffers from Indonesia on prospective land deals, Tan told reporters afterthe company's AGM in Kuala Lumpur yesterday.
Our capital expenditure this year will be at least RM100mil, mainly forworking capital, new land acquisitions and replanting,'' he said.
PPB Oil Palms has about 61,929ha of plantations in Indonesia, mainly inCentral Kalimantan and West Sumatra.
The ongoing development of oil palm plantations in Indonesia isprogressing smoothly and will increase significantly in stages, wherebythe planted and mature areas will drive higher economies of scale,†headded.
According to Tan, the Indonesian operations would play an increasinglyimportant part in the future profitability of the group, especially withsome 6,000ha of the earlier plantings now in production and more areascoming into maturity.
PPB Oil Palms, which can be considered a young player among the majorplantation groups in Malaysia, has a total land-bank of 141,946ha, ofwhich 56% is in east Malaysia and the balance in Indonesia.
The group owns and operates 13 oil palm plantations and seven palm oilmills in east Malaysia and Indonesia.
Tan said two new 40-tonne an hour mills were being built in Bintulu,Sarawak. The mills will begin operations in two months while one more inSugut, Sabah is due for completion in mid-year.
On completion of the mills, he said, the group would have nine in totalwith a combined processing capacity of two million tonnes of fresh fruitbunches a year.
PPB Oil Palms, he said, aimed to be a cost-efficient producer of palm oil.Our cost of production for CPO is now about RM650 per tonne compared withRM500–RM550 per tonne previously due to increasing labour and fertilisercosts.
However, Tan said he believed the company's prospects looked brightbecause its rising crop production and good oil extraction rates wouldhave a favourable impact on CPO output.
In addition, he said, its average CPO price this year was expected to behigher than last year's RM1,456 a tonne.
For us, anything (the spot CPO price) above RM1,500 to RM1,600 per tonneis considered very good and will help translate into good returns for thegroup,†Tan said.
In another development, PPB Oil Palms has reported an unaudited pre-taxprofit of RM47.7mil for its first quarter ended March 31, compared withRM46mil in the corresponding quarter a year ago. Its turnover also rose toRM117.6mil from RM98.9mil previously.
The company told Bursa Malaysia the improved performance was due to highercontribution from its refining associated company. However, the higherrevenue arising from better palm product prices was moderated by anincrease in operating expenditure, resulting in marginally lowerplantation profits.
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