Ling family-owned SOP gets RM 1.2 billion revenue from plantations in Sarawak

SOP sees RM1.16 bln revenue in FY11, strong performance on buoyant CPO prices

by Ronnie Teo borneo post June 26, 2012, Tuesday

KUCHING: Buoyant crude palm oil (CPO) prices provided strong support for Sarawak Oil Palms Bhd (SOP) for the financial year 2011 (FY11), registering a revenue of RM1.16 billion – a 60.2 per cent increase from the previous year’s RM728.1 million.

The group also recorded a profit before tax of RM361.9 million for FY11, an increase of 62.9 per cent from RM222.1 million in 2010.

According to SOP group executive chairman, Tan Sri Datuk Ling Chiong Ho in a statement released in line with its Annual General Meeting (AGM) in Miri yesterday, the strong performance was attributed to strong palm oil prices and higher FFB production throughout the group.

“The average price achieved for crude palm oil was RM3,232 per metric tonne (mt) and RM2,177 per mt for palm kernel,” he said. “Meanwhile, earnings per share of the group improved from 35.3sen to 55.9sen in 2011.”

During its AGM, SOP’s proposal for a first and final dividend of five per cent less tax at 25 per cent per ordinary share – amounting to an estimated RM16.29 million for FY11 – was approved and would be paid by July 23, 2012.

“The group’s fresh fruit bunch (FFB) production continued to increase from 673,260mt in 2010 to 839,785mt in 2011. This is a growth of 24.7 per cent. This increase is due to the increase of mature areas coupled with more young palms coming into prime production area.”

Ling added that SOP’s FFB yield per hectare increased marginally by 2.52 per cent to 20.37mt as a result of the dilution effect from its newly-matured areas.

Meanwhile, the group’s oil extraction rate (OER) decreased marginally from 21.23 per cent to 20.90 per cent. The executive chairman highlighted that this was the area which the management would continue to strive to improve this year.

In 2011, the group planted an additional 3,919 hectares of oil palms, thus further increasing the total area planted to 62,755 hectares out of a total land bank of 72,653 hectares.

“With 30.94 per cent of the planted area still immature, the FFB production is expected to increase over the next few years upon maturity of new planting areas,” he predicted.

Ling went on to reveal that the group’s fifth palm oil mill with a 60mt per hour capacity in Kemena, Bintulu is expected to be commissioned and be operational by next month.

In addition, the group’s sixth palm oil mill of 90 mt per hour at Baram, Miri is expected to be operational by the second half of 2013.

The group’s palm oil refinery and fractionation plant and kernel crushing plant are expected to be commissioned and operational by this month.

Going forward, Ling forewarned that like many other plantation companies, the group would be facing substantial increase in operating costs, particularly on the increase in salary and wages and a general increase in cost of operations.

“The present high export duty in Indonesia has caused heavy discounts on the prices of Malaysian refined palm products and thus squeezes on refining margin,” he said.

“Barring any unforeseen circumstances, the group is expected to achieve a reasonable profit in line with other plantation companies assuming palm oil prices remain at current levels,” he concluded.