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KUALA LUMPUR: TSH Resources Bhd saw core net profit grow 16.3% to RM40.1 million for its third financial quarter ended Sept 30, 2014 (3QFY14) from RM34.47 million a year ago, largely due to higher fresh fruit bunch (FFB) production.

FFB production grew 26% year-on-year (y-o-y) to 163,646 tonnes in 3QFY14, as more plantations came into maturity this year.

“On average for the past three years in terms of FFB yield, we have been producing 30 tonnes per hectare. We have a potential target of bringing it to 35 tonnes per hectare,” its chairman Datuk Kelvin Tan told a media briefing yesterday.

Tan believes this target is achievable in five years, as its self-developed tissue culture, the Wakuba ramet, begins to bear fruit.

In addition, 82% of TSH Resources’ oil palms are young and immature trees which will steadily yield more oil as they mature.

The national average, based on 2013 data by the Malaysian Palm Oil Board, was 19 tonnes per hectare.

Year-to-date, TSH Resources’ FFB production grew 27% to 483,048 tonnes y-o-y, while crude palm oil (CPO) production rose 17.6% to 263,607 tonnes in tandem with the higher production capacity of its mills.

TSH Resources has an oil extraction rate of 23% for its Indonesia plantations and 21% for its Sabah estates.

However, the group reported a 71% tumble in net profit to RM24.28 million for 3QFY14 from RM83.27 million a year ago due to gains on the disposal of Pontian United Plantations Bhd which amounted to RM85.3 million recognised during the period.

Revenue for 3QFY14 was higher at RM246.95 million from RM220.48 million a year ago.

“Despite lower average CPO price of RM2,170 compared with RM2,239 in 3QFY13, the segment’s operating profit surged 18% mainly resulting from the higher FFB production and ongoing initiatives to improve unit production cost and operational efficiencies,” TSH Resources said in a filing with Bursa Malaysia yesterday.

Net profit for the nine months ended Sept 30, 2014 (9MFY14) was lower at RM111.83 million versus RM120.45 million a year earlier. This was on the back of expanding revenue which came in at RM835.87 million from RM740.32 million a year ago.

 

This article first appeared in The Edge Financial Daily, on November 19, 2014.

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