KULIM plantation profits slide 23pc

Kulim Malaysia Bhd's plantation profits fell by 23 per cent to RM365 million for the financial year (FY) 2009 from RM475.3 million previously.

This was after excluding the negative goodwill arising from the acquisition of Sindora Bhd for RM93 million.

Chairman Tan Sri Muhammad Ali Hashim said after the company's 35th annual general meeting in Johor Baru today that the Malaysian plantation sector saw a challenging 2009.

"Lower crude palm oil (CPO) prices coupled with increased operational costs, shrunk operating profits," he explained.
Similarly, its plantation operations in Papua New Guinea and the Solomon Islands were also affected by the volatility.

Plantation revenue contribution took second place at 28 per cent with the top earner being the food and restaurant division with a 48 per cent contribution to group revenue for last year.

The full year consolidation of KFC Holdings (Malaysia) Bhd (KFCH) by QSR Brands Bhd (QSR), also saw the group's total revenue increase by 46 per cent to RM5.81 billion in FY2009 from RM3.99 billion previously.

This was after QSR managed to secure a 50.25 per cent holdings in KFCH on January 2 last year.

The group's foray into the food and restaurants business has proven its worth in cushioning the declining trend of CPO prices.

Despite the change in revenue mix, Muhammad Ali said in terms of earnings before interest and tax (EBIT), the plantations sector continued to be Kulim's main profit contributor for 2009 at 61 per cent, as opposed to the 41 per cent from its foods and restaurants business.

Amid the volatile CPO market, Muhammad Ali is optimistic the group would remain bullish as the palm oil industry is expected to flourish under the 10th Malaysian Plan (10MP) as outlined by Prime Minister Datuk Seri Najib Tun Razak recently.

The group also started 2010 on a positive note in posting a strong first quarter (1Q10) revenue, again driven by its plantation and foods and restaurants sectors.

It saw net profit figures grow 46 per cent to RM115.4 million in 1Q10 compared to RM79 million in the same period of last year, on the back of a RM1.51 billion revenue.

The revenue was an increase from the RM1.32 billion achieved in the same quarter previously.

The lower palm oil product prices translated into lower total plantation operating profit at RM107.6 million compared to RM115.2 million in the same quarter last year.

However, the successful acquisition of CTP (PNG) Ltd, a major palm oil producer in Papua New Guinea by its subsidiary New Britain Palm Oil Limited, increased its land bank by 25,000 hectares of mature oil palms and will further add to the group's profitability.

1Q10 also saw the group''s manufacturing operations, headed by its 91 per cent subsidiary, Natural Oleochemicals Sdn Bhd, post a RM17.9 million operating profit, far surpassing the RM26.9 million loss in the same period last year. -- Bernama