Sarawak Oil Palms set for bumper harvest, again

Yesterday was the first day at POC2012. Though things were not-so-smooth at the start, it proved to be fruitful towards the evening.

KUALA LUMPUR: SARAWAK Oil Palms Bhd (SOP) expects to harvest 900,000 tonnes of fresh fruit bunches by the end of the year, 10 per cent more than last year's 820,000 tonnes, as more young trees mature and bear more fruits.

Headquartered in Miri, the group has planted close to 63,000ha with oil palms in Sarawak. In an interview, SOP group financial controller Eric Kiu Kwong Seng spoke of the company's favourable tree profile.

"As of December 2011, about 23 per cent of our planted area is of prime fruit bearing ages. As more young trees mature, we expect very good harvest," he told Business Times on the sidelines of the Palm and Lauric Oils Outlook Conference (POC) 2012 held here yesterday. 

"By the end of this year, about a quarter of our total planted area will be of matured ages and bearing more fruit bunches," he said.

SOP's aggressive plantings as early as 2007 have resulted in 45 per cent of its planted area consisting of young oil palms and primed to bear more fruit bunches. This means big earnings growth potential in the next five years. Last year, the group added on 2,500ha to its landbank. To date, SOP has planted 84 per cent of its 75,155ha landbank.

To a question on this year's capital expenditure, Kiu said SOP is spending some RM300 million on new plantings, construction of Sabaju and Tinbarap mills and a 450,000 tonne-a-year refinery.

"The Sabaju mill is able to process 60 tonnes of fruit bunches while the Tinbarap mill can handle 90 tonnes an hour. We'll be commissioning our refinery in the middle of this year," he said.

With regard to the refinery, Kiu said his company will not be able to run it full capacity as yet. "We'll build up the operations phase by phase," he said.

SOP was set up in 1968 via a joint venture between Commonwealth Development Corp (CDC) and the Sarawak state government. In 1995, conglomerate Shin Yang Group bought CDC's entire stake and is now the largest shareholder with 36.5 per cent while state-owned Pelita Holdings Sdn Bhd holds 28.9 per cent.

SOP has a solid balance sheet. It had a net gearing of 50 per cent in 2003 but is now in a net cash position of some RM80 million.

In its filing to the stock exchange, SOP said its profits for 2011 jumped 60 per cent to RM242.95 million on the back of RM1.17 billion revenue. Eric attributed the solid performance to favourable palm oil prices and higher sales volume during the year.

Asked if the group could match last year's stellar performance, Kiu replied: "If palm oil prices were to go on trading at such buoyant levels, we should be able to do so." He said the group declared a payout of 5 sen a share last year. This was almost double that of previous years.

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