29/07/05 (Business Times) - MALAYSIAN Mosaics Bhd, which owns 40,485hectares of oil palm plantations in Sabah, will be going all out to boostits other businesses this year to cushion the impact of lower crude palmoil (CPO) prices.

The diversified company derives 65 per cent of its earnings from palm oilcultivation, property development (12 per cent), mosaic and homogeneousceramic tiles (10 per cent) and others (fertiliser, credit financing,automotive, quarry and buildings material).

Malaysian Mosaics group executive chairman David Park said the plantationsdivision forms a critical part of its earnings and it expects CPO pricesto trend downwards for the rest of the year.

“It will be quite a challenge for us to keep up this year because CPOprices have fallen to RM1,360 a tonne currently from an average of RM1,800a tonne last year.

"But we will work hard by controlling or improving our CPO production costof RM760 a tonne as well as develop our other businesses," Park toldreporters after the company’s 41st annual and extraordinary generalmeetings yesterday.

Park said to offset the low CPO price impact, the company will focus onits fertiliser, property, automotive and credit financing businesses whichhe said is a sensible and logical strategy.

For the first quarter ended April 2005, the diversified group made a netprofit of RM15.6 million on the back of a RM389.6 million revenue. Forfinancial year ended January 2005, the group made a net profit of RM102.5million on the back of a RM1.4 billion revenue.

Park said the company’s plantations division is among Sabah’s efficientproducers, in which 3 out of its 4 mills achieved an average oilextraction rate of 22.6 per cent compared to Sabah’s industry standard of21 per cent.

"For the credit financing arm, the business is expanding in the next 6months and we plan to open two more branches in Peninsular Malaysia andone in Kuching Sarawak," said Park.

The company currently has 9 branches, of which 5 are in PeninsularMalaysia and four in Sabah. It offers loans to small- and medium-scaleenterprises (SMEs) as well as for cars, homes, agriculture land,industrial goods and others.

Malaysian Mosaics is one of the country’s top three fertiliser suppliers,sixth largest producer of mosaic and ceramic tiles and a strong propertyand plantation player in Sabah.

It also distributes Mercedes trucks in Sabah and Mercedes cars in theKlang Valley via its 52.8 per cent listed subsidiary Hap Seng ConsolidatedBhd.

Meanwhile, Hap Seng wholly owns Si Khiong Star Sdn Bhd, which wasappointed to sell Mercedes car by DaimlerChrysler Malaysia Sdn Bhd lastSeptember. Construction of its showroom at Jalan P Ramlee in Kuala Lumpuris still on-going.

Park said the company will also be shifting its corporate headquartersfrom Petaling Jaya, Selangor, to MUI Plaza in Jalan P Ramlee Kuala Lumpur,which it bought for RM166 million in March last year.