PPB Group Bhd will spend RM350.8mil this year to expand its businesses in oil palm plantation, flour and feed milling, sugar cane plantation and refining, livestock farming, edible oil refining and trading, property, and waste management.
Of the total, RM243.8mil goes to plantation unit PPB Oil Palms Bhd, RM68.6mil to flour milling unit FFM Bhd, RM17.6mil to PPB Leisure, RM11.5mil to PPB Hartabina, and the remaining to other operations, said executive chairman Datuk Oh Siew Nam.
Oh was speaking at a press briefing in Kuala Lumpur yesterday to announce last year's financial results. PPB Group posted pre-tax profit of RM733.51mil and sales of RM11bil for the financial year ended December 2004.
PPB Oil managing director Khoo Eng Min said, of the RM243.8mil allocation, RM129mil would be used for mill construction and about RM115mil for plantation development in Sabah and Sarawak and Indonesia.
The company increased its land-bank by 67,189ha to 210,788ha last year with the acquisition of four Indonesian firms – PT Sarana Titan Permata, PT Karunia Kencana Permaisejati, PT Bumi Sawit Kencana, and PT Mentaya Sawit Mas.
He said some 80,000ha of the total had been planted, and added: “We have enough land-bank to work on for many years to come.''
“Currently, of our planted acreage, 56% are prime yielding areas, 41% less than five years old, and the balance unproductive land, mainly in east Malaysia, that we are in the process of replanting,” Khoo said.
Fresh fruit bunches production was likely to reach 1.4 million tonnes in 2005 from last year's 1.26 million, and increase to 1.55 million in 2006 and to 1.7 million in 2007, he added.
This year, crude palm oil (CPO) production is likely to increase by 10% to 15%, with prices estimated to range between RM1,200 and RM1,400 a tonne. With CPO prices on the uptrend last year, PPB Oil Palms achieved an average realised price of RM1,610 a tonne.
“Hopefully, higher production will mitigate the lower CPO prices. We hope to maintain our pre-tax profit this year,” Khoo said. PPB Oil posted pre-tax profit of RM264.3mil on the back of RM588.4mil sales for the financial year ended December 2004.
FFM would use its allocation to build the second phase of its flour mill on Pulau Indah and another processing plant at West Port, as well as expand its refineries, managing director Tan Gee Sooi said.
In addition to the RM68.6mil capital expenditure, the board has just approved a further RM60mil for FFM's expansion.
“Ocean freight rates and prices of raw materials have been on the uptrend since last June. Freight has gone up 25%, and prices of grains have seen increases of 10% to 15%,” Tan said, adding that the business environment this year would be challenging.
He added that the flourmills association was still awaiting a reply from the Government on its proposal to increase the price of flour.
PPB Leisure, which owns the Golden Screen Cinema (GSC) chain, will use the RM17.6mil allocated for its latest cinema in Bandar Utama Phase Two. The cinema, to have 13 screens, is targeted to open in the middle of the year.
PPB Hartabina plans to use RM8.7mil to renovate Cheras Plaza and RM2.8mil to upgrade Leisure Mall.