Palm oil price rally helps Kulim post best ever results in FY21

Palm oil price rally helps Kulim post best ever results in FY21
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KUALA LUMPUR (July 31): Kulim (M) Bhd, which is understood to be mulling an initial public offering (IPO), delivered its best ever set of financial results with a profit before tax and zakat of RM433.81 million for the financial year ended Dec 31, 2021 (FY21), thanks to record palm oil prices.

In a statement, the group said its revenue jumped by 48.56% to RM1.65 billion from RM1.11 billion a year ago, as higher average selling prices for crude palm oil and palm kernels offset lower sales volumes and yields from its plantations.

"...lower impairment and provision expenses compared to a year earlier helped the group return to the black," it said in a statement on Sunday (July 31).

Meanwhile, the group had also processed 1.42 million tonnes of FFB and 295,747 tonnes of crude palm oil (CPO).

Kulim said its oil extraction rate fell to 20.83%, from 21.04%, yet remained higher than the industry average of 19.68% for Peninsular Malaysia and 19.92% for Malaysia as a whole.

“While we were operationally stretched by insufficient manpower, financially we stood to benefit from sky-rocketing palm product prices. This translated into one of our best financial results to date, despite sub-optimum production and yield," said Kulim MD Mohd Faris Adli Shukery.

"We were naturally pleased with our financial windfall; it was even greater pleasure to see the group gradually shape into the agriculture-focused, digitally enhanced, and sustainably run organisation that we envisage at the end of our current transformation journey,” he added.

Looking ahead, Kulim plans to grow into an integrated agribusiness player by strengthening its position in the midstream and downstream through partnerships and acquisitions of refineries and palm kernel crushing plants.

In addition, it plans to expand its livestock business of cattle and sheep, while exploring the possibility of partnering with a dairy producer.

The group said it also aims to build a robust and thriving agri-food portfolio to contribute positively to the national food security agenda.

“Our ultimate objective is for Kulim to become a flagship company that can enhance the state and national food security agenda. We will seek to establish a food marketplace for smallholders, large private players and government-linked companies,” said Mohd Faris.

The group is adopting the Internet of Things (IoT) to further enhance crop management, using automation to reduce labour requirements of its new agribusiness segment.

In addition, it is implementing a structured environmental, social and governance (ESG) framework, which will align its sustainability initiatives with its vision, strategy and goals.

"As part of its commitment to ESG, Kulim is targeting to halve its carbon footprint by 2025 and has invested in expanding its renewable energy infrastructure in biogas plants, that have helped cut the group’s methane emissions by 90%. The initiative is also in line with Kulim’s business direction to expand its potential in green business, which is expected to contribute positively to the group’s earnings as a new income stream," it said.