Subur Tiasa back in the black in 3Q on higher timber, FFB prices

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KUALA LUMPUR (June 30): Sarawak-based Subur Tiasa Holdings Bhd returned to the black in the third quarter ended April 30, 2017 (3QFY17) thanks to higher average export selling prices for timber and fresh fruit bunches (FFB) and lower production cost of FFB.

The group, which is under the stable of the Rimbunan Hijau group, reported a net profit of RM536,000 for the quarter, compared with a net loss of RM13.87 million in 3QFY16.

In a filing with Bursa Malaysia, the group said the weakening of the ringgit against the US dollar boosted the average selling price for timber and timber products, while the increase of 61% in production volume led to a reduction of unit production cost of FFB.

Quarterly revenue came in at RM115.39 million, up 4.7% from the RM110.24 million recorded in 3QFY16.

For the cumulative first nine months of FY17 (9MFY17), Subur Tiasa’s net loss contracted 47.4% to RM8.16 million from RM15.6 million a year earlier, although revenue declined 9.5% to RM377.36 million from RM416.91 million.

According to the group, the improvement in its bottomline was driven by higher crude palm oil (CPO) and FFB average selling prices by 30% and 44% respectively, and higher FFB production volume by 20% due to increasing area of more matured palm trees with higher yield.

Moving forward, Subur Tiasa expects the oil palm plantation segment to contribute positively to the group as the upcoming peak crop season will lead to an increase in FFB production in its oil palm plantation.

“Despite the recent downward pressure on CPO prices, the group is committed and well anchored to achieve better results through implementation of cost control measures and enhancement of efficiency,” it said.

As for the timber segment, Subur Tiasa said prices are expected to sustain in view of the prevailing tight supply of logs in the market as a result of the forest management and timber certification initiated by the authority.

As a result, the higher tax premium on timber imposed by state authorities will impact the performance of the timber division, it said.

“Nevertheless, the quantum of the impact will be mitigated by higher selling price and the US dollar,” it said.

Subur Tiasa’s share price settled unchanged at RM1.38 today, valuing the group at RM259.61 million.