Tuesday, 9 May 2017

(The Star) TH Plantations to continue selling non-core assets

KUALA LUMPUR: TH Plantations Bhd plans to continue disposing of some of its non-core, non-strategic and under-performing assets amounting to RM150mil this year.

“This is part of the group’s strategy to be lean and focused on performing plantation assets, as we are at the tail end of our rationalisation plan of owning prime and young estates to boost productivity.

“Some of the plantation assets that we are planning to dispose of are on hilly areas,” chief executive officer Datuk Seri Zainal Azwar Aminuddin told reporters after the company’s AGM here yesterday.

TH Plantations sold its wholly owned unit, THP Gemas Sdn Bhd, for RM154mil, boosting its bottom line last year.

Apart from selling its non-core assets, Zainal said the company, which has been on an aggressive growth trajectory acquiring about 45,000ha of green and brown-field plantation in the last three to four years, is ready to flex its muscles with the young estates.

“When we acquired the land, we needed to do some replanting in the green fields and rehabilitation work on the brown field. Now, we have 105,000ha with an average mature age of 12 years.

“About 44% of our planted area is between four and nine years old, while 24% is in its prime and mature age and only 5% is considered old.

“Ultimately, we are aiming to reach 10 years on average for our plantations that should be achieved in two years,” he said.

Zainal also expected yields to improve tremendously from this year in tandem with the improvement in fresh fruit bunch (FFB) production, as well as the better crude palm oil (CPO) prices.

“Expect a high potential upside from us from now on, as we project FFB production to grow by more than 10% this year to 841,000 tonnes compared with last year.

“We forecast CPO prices to hover between RM2,500 and RM2,700 per tonne this year,” he said.

TH Plantations recorded higher average selling prices of CPO and palm kernel (PK), which were realised at average prices of RM2,463 per tonne and RM2,365 per tonne last year compared with the CPO price of RM2,081 per tonne and PK price of RM1,545 per tonne in 2015.

In 2016, the group recorded a 23% higher revenue of RM562.3mil compared with 2015.

Its profit after tax and minority interest of RM147.1mil reflected a jump of 137% year-on-year. And the company declared a final dividend of six sen per share, amounting to RM53.03mil for 2016 with a 5.4% dividend yield.

“The improved performance is a testament of the group’s ongoing growth strategy.

“The group has seen a steady stream of new areas coming into maturity throughout the few years, which has somewhat compensated the effects of the prolonged adverse weather conditions on production.

“The contribution of these new areas has helped the group take advantage of the high commodity price environment and boost revenues.

“At the same time, the group has also intensified its efforts to increase the utilisation of its mills by purchasing good quality FFB externally and increasing CPO production,” said Zainal.

Zainal added that the industry has remained resilient amid challenges.

“I believe the industry has evolved with the times and we ensure that we protect our margins in difficult periods by exploring new ways of doing things to increase productivity and optimise costs.

“We have managed to do these things, and our focus now is to get back on track with our long-term plans,” he said.