MARKET DEVELOPMENT
TH Plantations Earnings Surge as Palm Oil Prices Climb
TH Plantations Earnings Surge as Palm Oil Prices Climb
30/11/2016 (The Star) - TH Plantations Bhd's earnings jumped in the third quarter ended Sept 30, 2016 as higher crude palm oil (CPO) and palm kernel (PK) prices more than offset the effects of lower production and yields, which continue to suffer from the lagged effect of El Nino.
It said on Monday the earnings were up 209% to RM19.17mil from RM6.19mil while pre-tax profit rose 70% to RM25.50mil from RM14.97mil.
Revenue increased by 27.5% to RM170.31mil from RM133.49mil. Earnings per share were 2.17 sen compared with 0.7 sen. The higher revenue was mainly due to higher sale prices of CPO and palm kernel.
“On average, the group’s trading price for CPO was RM2,559 per tonne, 23% higher than the same period last year. Palm kernel traded at about RM2,456 per tonne, almost 85% higher than the comparative quarter last year,” it said.
TH Plantations CEO and executive director Datuk Seri Zainal Azwar Zainal Aminuddin said commodity prices continue to trade at encouraging levels, supported by lower production across the industry, depleting stocks, weaker currencies and possibly higher biodiesel mandates.
Higher CPO and PK prices more than offset the effects of lower production and yields, which continue to suffer from the lagged effect of El Nino.
“Nevertheless, we are encouraged to see significant improvement in production on a quarter to quarter basis, with 3QFY2016 fresh fruit bunches (FFB) production growing by 31% compared to the previous quarter this year.
“This marked improvement may be an indication of stronger recovery in production, and we hope that it will continue to recover in the coming quarters,” said Zainal Azwar.
For the nine months to September, its earnings rose 9.5% to RM19.6mil from RM17.92mil in the previous corresponding period. Revenue was up 20.3% to RM392.23mil from RM325.97mil.
The group’s FFB production fell by 5% compared to the same period last year to 552,240 tonnes, but average realised selling prices of CPO and PK increased by 15% and 46% from last year to RM2,391 and RM2,212 per tonne respectively, contributing to the group’s improved profit margins.
“We have remained resilient amidst the challenges faced by the industry. Lower production hit us hard, particularly in the first quarter of this year, but we are pleased to report that our overall production to date has not been as significantly impacted as compared to other industry players.
“This is a result of our growth strategy, from which we see a steady stream of new areas coming into maturity throughout these few years, somewhat compensating the effects of weather on production.
“Of course in the initial stages of maturity the yields of these areas are inevitably lower, but their contribution has helped us take advantage of the high commodity price environment and boost revenues,” it said.
TH Plantations also recently announced the disposal of its subsidiary THP Gemas Sdn. Bhd., which owns three estates and a palm oil mill in the state of Negeri Sembilan. This disposal is part of the group’s rationalisation initiative to divest its non-core assets and is expected to be completed before the year ends.
“This exercise is part of our strategy to consolidate our core plantation assets in a more focused and strategic manner, as well as demonstrates our commitment to deliver value to our shareholders. The proceeds of the disposal will be utilised towards paring down our borrowings and reducing our gearing level in the medium term.”
“The group is focused on cultivating growth and setting the stage to benefit from the higher demand for palm oil with its enlarged land bank. Through a structured development and replanting programme carried out in the past few years, the group’s area planted with oil palm now spans over 60,000 hectares spread throughout Malaysia, at an average age of 10 years.
“Approximately 60% of the group’s mature area is made up of young estates, with more coming into maturity in the next two to three years, promising a steady revenue growth in coming years.
“The group’s yield and oil extraction rate improvement programmes are also ongoing, while its consolidation of brownfield acquisitions is progressing well,” he said.
It said on Monday the earnings were up 209% to RM19.17mil from RM6.19mil while pre-tax profit rose 70% to RM25.50mil from RM14.97mil.
Revenue increased by 27.5% to RM170.31mil from RM133.49mil. Earnings per share were 2.17 sen compared with 0.7 sen. The higher revenue was mainly due to higher sale prices of CPO and palm kernel.
“On average, the group’s trading price for CPO was RM2,559 per tonne, 23% higher than the same period last year. Palm kernel traded at about RM2,456 per tonne, almost 85% higher than the comparative quarter last year,” it said.
TH Plantations CEO and executive director Datuk Seri Zainal Azwar Zainal Aminuddin said commodity prices continue to trade at encouraging levels, supported by lower production across the industry, depleting stocks, weaker currencies and possibly higher biodiesel mandates.
Higher CPO and PK prices more than offset the effects of lower production and yields, which continue to suffer from the lagged effect of El Nino.
“Nevertheless, we are encouraged to see significant improvement in production on a quarter to quarter basis, with 3QFY2016 fresh fruit bunches (FFB) production growing by 31% compared to the previous quarter this year.
“This marked improvement may be an indication of stronger recovery in production, and we hope that it will continue to recover in the coming quarters,” said Zainal Azwar.
For the nine months to September, its earnings rose 9.5% to RM19.6mil from RM17.92mil in the previous corresponding period. Revenue was up 20.3% to RM392.23mil from RM325.97mil.
The group’s FFB production fell by 5% compared to the same period last year to 552,240 tonnes, but average realised selling prices of CPO and PK increased by 15% and 46% from last year to RM2,391 and RM2,212 per tonne respectively, contributing to the group’s improved profit margins.
“We have remained resilient amidst the challenges faced by the industry. Lower production hit us hard, particularly in the first quarter of this year, but we are pleased to report that our overall production to date has not been as significantly impacted as compared to other industry players.
“This is a result of our growth strategy, from which we see a steady stream of new areas coming into maturity throughout these few years, somewhat compensating the effects of weather on production.
“Of course in the initial stages of maturity the yields of these areas are inevitably lower, but their contribution has helped us take advantage of the high commodity price environment and boost revenues,” it said.
TH Plantations also recently announced the disposal of its subsidiary THP Gemas Sdn. Bhd., which owns three estates and a palm oil mill in the state of Negeri Sembilan. This disposal is part of the group’s rationalisation initiative to divest its non-core assets and is expected to be completed before the year ends.
“This exercise is part of our strategy to consolidate our core plantation assets in a more focused and strategic manner, as well as demonstrates our commitment to deliver value to our shareholders. The proceeds of the disposal will be utilised towards paring down our borrowings and reducing our gearing level in the medium term.”
“The group is focused on cultivating growth and setting the stage to benefit from the higher demand for palm oil with its enlarged land bank. Through a structured development and replanting programme carried out in the past few years, the group’s area planted with oil palm now spans over 60,000 hectares spread throughout Malaysia, at an average age of 10 years.
“Approximately 60% of the group’s mature area is made up of young estates, with more coming into maturity in the next two to three years, promising a steady revenue growth in coming years.
“The group’s yield and oil extraction rate improvement programmes are also ongoing, while its consolidation of brownfield acquisitions is progressing well,” he said.