02/08/05 Sabah (The Edge Daily) - IJM Plantations Bhd (IJMP) will investat least RM30 million to build a palm oil mill in Sabah to cope with theanticipated higher output when its young plantations mature in about 24 to30 months.

"In about 24 to 30 months' time, we will be looking at investing in onemore mill," group managing director and chief executive officer VelayuthanTan said on Aug 2.

The proposed mill, which will be its fourth, is expected to process 30tonnes of FFB per hour and will be expandable to 60 tonnes per hour.

The company’s existing three mills have a combined maximum capacity ofabout one million tonnes currently.

It was learnt that the mill would initially cost RM30 million for theinfrastructure, but may cost up to about RM50 million once it gears up forcapacity of 60 tonnes per hour.

IJMP processes about 377,000 tonnes of fresh fruit bunches (FFB) annuallyand Tan expects consistent double-digit growth for the next three to fouryears.

Investors should take a long view of the company’s potential “as we havenot realised the full value yet”, he told reporters after its AGM inPetaling Jaya.

Tan said a large part of the plantations, measuring 24,401ha, had yet toreach their prime.

Of the 24,401ha, about 8,967ha was in prime maturity stage (at eight to 19years), another 8,945ha at young maturity (four to seven years) and theremaining 6,489ha at an immature stage (one to three years).

Tan assured shareholders that “we will be generous with our dividends”once the full value of the plantations was realised.

According to the latest results, for the fourth quarter ended March 31,2005, its revenue was RM54.9 million, up 8.2% from RM50.70 million in theprevious corresponding quarter. Net profit fell about 33% to RM3.50million from RM5.20 million a year earlier.

IJMP had attributed higher revenue to higher crop production and kernelsales but net profit fell because of erosion of margins due to loweraverage CPO price, increased state sales tax and fuel costs.