KUCHING: Subur Tiasa Holdings Bhd, whose bottomline has been hit by low logs production, is in the process of certifying its forest concessions.
The Sibu-based company expects to obtain the forest management certification for its forest located in Sibu, Kapit and Bintulu regions.
In the nine-month period ended April 30, 2019, Subur Tiasa plunged into the red with group pre-tax loss of about RM23.9 million on revenue of RM242.3 million against a pre-tax profit of RM893,000 and a revenue of RM251.8 million in the preceding year corresponding period.
Loss per share widened to 10.34 sen from 3.49 sen.
The bulk of the losses came from the timber business which incurred pre-tax loss of RM24.4 million although the losses were reduced from RM33.6 million during the period under review. The timber segment generated a revenue of RM162.8 million against RM171.5 million previously or a decline by five percent.
Subur Tiasa attributed the lower turnover to reduced export sales volume of timber and timber products.
“Despite the lower revenue, year-to-date, loss decreased by 28 percent mainly supported by improved average selling prices of timber products and implementation of cost-cutting measures,” the company said in notes to its latest financials.
However, the third quarter ending April 30, 2019 has seen much improvement as timber revenue jumped by 57 percent while losses were cut by 32 percent as compared to Q3-2018 due to higher sales volume of timber and
timber products.
The group’s timber business ranges from logging to sales of logs, manufacturing of timber products like plywood, veneer, raw and laminated particle board, sawn timber, finger-joint moulding, charcoal to supply of electricity for its manufacturing facilities. The group is a subcontractor for reforestation or tree planting activities.
Subur Tiasa’s other core business is in oil palm plantation, which contributed about RM74.9 million to group revenue in the first nine months of the current financial year as compared to RM77.5 million during the corresponding period in 2018. The segment incurred pre-tax loss of RM4.74 million, a reversal from pre-tax profit of RM26.3 million during the same period.
The company blamed the dismal financial performance on a 28 percent drop in the average selling price of fresh fruit bunches (FFB) despite a 26 percent increase in FFB production.
Commenting on prospects, Subur Tiasa said: “The group expects a better performance in oil palm segment with increasing area of more matured palm trees and improvement in FFB production in line with the upcoming peak
crop season.
“Crude palm oil price is expected to stabilise in anticipation of the implementation of the biodiesel mandate and an expected rise in demand from key importers.”
In May, the group produced 21,330 tonnes of FFB, which was an improvement from 20,156 tonnes in April, 16,888 tonnes (March) and 16,321 tonnes (February). January’s production was 20,170 tonnes.
The company said it expects all its oil palm estates to be certified under the Malaysian Sustainable Palm Oil (MSPO) scheme by this year. While MSPO certification has been obtained by Palmlyn Sdn Bhd under the group, another company, Victory Pelita Kabah Sdn Bhd is in the final stage of getting a similar certification.
The group’s total land bank stood at about 29,000 hectares as at financial year 2018. The weighted average palm age is 8.6 years old.
Subur Tiasa anticipates timber and timber products’ prices to be sustained going forward in view of low production of logs across the timber industry in Sarawak.
“The group is committed to review and improve the effectiveness of our strategic transformation plans continuously in order to enhance stakeholder value and businesses efficiency,” it said.
