18/08/2025 (The Edge Malaysia) - INNOPRISE PLANTATIONS BHD (KL:INNO) or IPB is once again the winner of the award for the Highest Return On Equity Over Three Years in the plantation sector at The Edge Malaysia Centurion Club Corporate Awards. This year’s award is the Sabah-based company’s fourth consecutive win since 2022, outperforming its plantation industry peers with a market capitalisation of below RM1 billion.

The oil palm planter delivered record earnings for the financial year ended Dec 31, 2024 (FY2024), driven by higher sales volumes of crude palm oil (CPO) and palm kernel (PK), improved extraction rates and stronger average selling prices. Net profit surged 65% to RM86.5 million from RM52.4 million a year earlier, while revenue grew 23.8% to RM276.8 million from RM223.6 million. Earnings per share climbed to 18.07 sen from 10.94 sen.

The solid financial performance in recent years helped push the group’s weighted return on equity (ROE) over the three years from FY2022 to FY2024 to 23.9%. Based on the Centurion methodology, its ROE came in at 26.5% in FY2022, 17.2% in FY2023 and 26.9% in FY2024.

IPB’s largest shareholder is Yayasan Sabah with a 50.22% stake, followed by TSH Resources Bhd (KL:TSH) with a 21.94% stake.

The group manages 22,763ha of land, of which 54% or 12,246ha are planted with oil palm. Its plantations are located in six estates — Imbak, Gunung Rara, Labau, Maliau, Lokan and Luasong — and it has a palm oil mill near Gunung Rara/Kalabakan.

Fresh fruit bunch (FFB) production rose 1.3% to 275,124 metric tons (MT) in FY2024 from 271,493MT in FY2023, with yield per hectare improving to 22.5MT/ha from 22.2MT/ha, supported by increased mechanisation.

CPO output climbed 8.1% year on year (y-o-y) to 58,881MT, underpinned by a higher oil extraction rate of 21.44% versus 19.82% previously. PK production grew 6.6% y-o-y to 10,056MT, with the kernel extraction rate improving to 3.66% from 3.43%. Average selling prices also increased, up 11% y-o-y for CPO and 34% for PK.

IPB may experience a bumper crop period in the near future given that about 93% of its palm trees are in their prime nine- to 10-year maturity stage. This means replanting won’t be needed for another five to six years, giving the group room to focus on soil health, infrastructure and sustainability.

“Meanwhile, the remaining palms classified as young mature are projected to deliver progressively higher yields over the coming years. As these trees mature further, their increasing output will help stabilise revenue streams and support long-term financial planning, ensuring a balanced transition as older palms eventually reach the end of their productive cycle,” IPB said in its 2024 annual report.

Apart from oil palm, the company also started a Laran tree planting trial in 2018. This light hardwood species native to Sabah is well-adapted to hilly terrain. The initiative commenced in earnest in 2020 to make productive use of underutilised land and support environmental restoration.

IPB has earmarked 4,500ha for Laran cultivation, with 3,389ha — about 15% of its total land bank — already planted as at end-December 2024.

Looking ahead, the group highlighted risks including geopolitical tensions, US trade tariffs, rising wages, higher diesel and fertiliser costs, and climate-related disruptions, all of which could weigh on the plantation sector.

It cautioned that the current decline in CPO and PK prices signals “marked uncertainty”, pointing to a challenging year ahead.

Still, on a positive note, the group highlighted the growing health awareness that is boosting market demand for palm oil products. Furthermore, IPB noted that the projections of rising timber and forest product demand over the next 30 years, driven by population growth and evolving consumption patterns, would result in an imbalance between supply and demand. It believed such a scenario would help lift Laran wood prices in the future.

“Considering environmental concerns and limitations of traditional forest sources, it is unlikely that they will provide sufficient and sustainable supply. Hence, ITPs (industrial tree plantations) are poised to become the future of wood supply, catering not only to the timber industry but also as substitutes for plastic consumer goods. This augurs well for the group’s Laran tree planting initiative,” it said in the annual report.

https://theedgemalaysia.com/node/766592