11/09/06 (The Star)  - Despite problems related to high gearing and other issues, Kumpulan Guthrie Bhd group chief executive Datuk Abdul Wahab Maskan has managed to position the group as a reputable regional palm oil player. His vision is towards global player status, he tells assistant news editor HANIM ADNAN in an interview.

The group is targeting FFB production of 22 tonnes per ha and 20.3 tonnes per ha for the Malaysian and Indonesian operations respectively in 2008.
StarBiz: What will Guthrie be focusing on over the next five years? 

Wahab: At the operating level, Guthrie is pushing aggressively to realise the key performance indicator (KPI) targets that were recently disclosed, including:

·the return on equity (ROE) of 8% in 2006 and eventually 12% in 2008, and

·fresh fruit bunch (FFB) production of 20.1 tonnes per ha for the group plantation operations in Malaysia and 17.5 tonnes per ha for the Indonesian operations in this year. 

For 2008, we are targeting FFB production of 22 tonnes per ha and 20.3 tonnes per ha for the Malaysian and Indonesian operations, respectively.

Guthrie will strategically focus on the continued strengthening of its organisational structure and performance as well as operations in plantations and property, enhancing research and development capabilities and meeting our KPI and balanced score card targets.

Of late, plantation analysts seem to be giving better ratings on Guthrie, particularly based on the progress of its Minamas plantation listing in Indonesia and improved Malaysian plantation and property operations. What is your view on this new development? 

The optimism from the plantation analysts has been encouraging. The key drivers to the positive outlook, among others, include stronger performance of the plantation segment, driven by Plantation Indonesia and significant contribution from the property division.

In the first six months of this year, Guthrie Plantations registered a 20.7% increase in the production of FFB for the Malaysian and Indonesian operations combined.

Production from the Indonesian operations alone surged by 26.7% from the year before. The FFB production in Indonesia increased to 1.39 million tonnes in the first half of 2006 compared with 1.09 million tonnes in the corresponding period of 2005. 

Malaysian plantations also recorded an improvement in FFB production – by 12.4% to 890,749 tonnes in the first six months of this year from 792,204 tonnes in the same period last year. 

The improvement in the group's FFB production and the ongoing strengthening of plantation operations, which include yield enhancement, quality improvement and cost reductions, will further drive the yield and subsequent earnings for the group. 

Guthrie expects to sustain the performance of the property development segment. 

Last year, Guthrie Property contributed an operating profit of about RM170mil, representing 40% of total group profit.

I am optimistic of achieving higher results this year, given the buoyant CPO market brought about by demand for biodiesel and also from traditional CPO buyers like China and India.

What are the challenges and opportunities ahead for Guthrie to strengthen its position as a regional plantation player? 

We see opportunities in every challenge. Guthrie, therefore, will need to be efficient both in operations and costs through yield enhancement, yield maximisation and sustainability. 

Guthrie is also looking at replanting with high yielding clonal palms, AAB1. 

We have chosen a new replanting area in our three estates - Bukit Cerakah, Bukit Talang and Bukit Serkam - totalling 220ha. 

These Category One estates, with good soil structure and textures, are highly conducive for plant growth and can give a peak yield of 40 tonnes per ha per year!

To successfully respond to the policy changes and market acceptance of palm oil in key export markets, Guthrie is implementing best agricultural and milling practices, including the compliance with international standards, i.e. EUREPGAP (European Retailers and Producers' Good Agricultural Practices) and HAACP (Hazard Analysis and Critical Control Point).