12/6/06 9Business Times)  - MALAYSIAN plantation and property group Kumpulan Guthrie Bhd's initiative in enhancing its earnings from its plantation division is beginning to show results.

Group chief executive (CEO) Datuk Abd Wahab Maskan said the strategy and plans which the group has put in place has delivered the targeted numbers.

Profit contribution from the plantation division to the group is expected to rise to 75 per cent for its current financial year from 70 per cent for the past two years.

"These initiatives are beginning to show results. In addition, the parameters of CPO (crude palm oil) prices remain to our expectation and we believe they will be sustained in the next two years, unless there's new demand for CPO," he told Business Times in an interview.

He said tremendous improvement has been recorded over the past two years, and Guthrie is now on track to achieve a yield of 17-18 tonnes per hectare this year.

Between 2003 and 2005, the group's yield of 10 tonnes per hectare improved to 15.5 tonnes per hectare.

"Our immediate focus is to bring the group to the best optimal level of upstream plantation," Abd Wahab said.

Guthrie has planted a "tissue culture" this year to ensure consistent performance, and this is showing in its increasing yield per hectare.

Currently, Guthrie has a landbank of 101,603ha in Malaysia and 220,201ha in Indonesia, with a planted area of 98,725ha and about 169ha respectively.

In Malaysia, the group has a high percentage of young harvested crops of less than seven years due to massive replanting of rubber with oil palm which has resulted in a low yield.

However, Abd Wahab said the group's yield should average to 20 tonnes per ha in the next two to three years.

In Indonesia, the group expects to complete planting of oil palm on about 20,000ha next year.

"As such, there will be another batch of yield coming from those 20,000ha in future years, which will bring us to another level," he added.

Guthrie is forecast to produce over 1.1 million tonnes of CPO next year, of which about 400,000 tonnes will come from its plantations in Malaysia and the rest from Indonesia.

Abd Wahab said the group can expect a futher boost in its earnings for 2007 when it starts producing its highest standard of quality oil next year.

"This highest standard of quality oil will command a better CPO price. It will give a lot of impact to our bottom line," he said.

On Guthrie's plans to list its Indonesian unit, Minamas Plantation, on the Jakarta Stock Exchange, Abd Wahab said that the unit should be ready for it next year.

"We are now making sure that it is producing the right numbers," he said.

Abd Wahab also said that Guthrie is in the midst of evaluating several options to venture into the biodiesel business. It will put forward some proposals to its board of directors in the next two months.