IOI Group has undergone significant global and local expansion in its efforts to be optimally integrated in the full value chain. Group executive director Datuk Lee Yeow Chor notes that the IOI group, which will be strengthening its new acquisitions, was able to perform above market expectation despite a turbulent external environment
DATUK LEE YEOW CHOR
STARBIZ: How are your plans to strengthen the business coming along?
Lee: During the last one-year, we have undertaken a fairly extensive new construction, expansion and acquisition of palm oil processing facilities at different parts of the world. This worldwide expansion fits in nicely with the positioning of palm oil as a product with global market coverage.
Our new plans are strategically drawn out to ensure the most efficient palm oil supply chain to our customers in terms of costs, reliability, timeliness, safety and traceability.
In Rotterdam, we have constructed a new palm oil refinery to complement our specialty oils and fats plant in Amsterdam as well as serve new customers in the commodity markets of EU and Eastern European countries.
Nearer home in Johor, we have acquired a refinery and specialty fats plant complex to serve new customers in the specialty fats markets in the Asia-Pacific and Middle East.
We have also expanded into palm kernel fractionation at our palm kernel crushing plant in Sandakan, Sabah, to serve our specialty fats plants in the US and Egypt. Besides that, we are undertaking a second expansion of our refinery in Sandakan to complement the growing production of crude palm oil (CPO) in Sabah.
In Chicago, we have undertaken a conversion and expansion of our refinery there to meet new demands for palm oil-based fats in the US.
StarBiz: Are you reaping the benefits of earlier moves to better position the business? Kindly elaborate.
Lee: We have always looked into various means to further optimise and improve our operations, productivity and yield, regardless of the prevailing economic conditions.
Our plantation operations are very cost-efficient and yields are consistently improved in an environment of fluctuations in commodity prices. Furthermore, we have invested considerably, locally and overseas, to ensure that we are optimally integrated in the full value-chain of the palm oil business worldwide as explained earlier.
In that way, we are well-positioned to reap the benefits of any upswings and protected against any downshifts in the commodity palm oil, industrial oleochemicals or specialty oils and fats sectors.
StarBiz: What are the trends in the industry or economy that are having a positive impact on your business?
Lee: The trans fats issue in the West is helping to drive consumers’ awareness of the health benefits of palm oil and generate greater demand for its applications in the food and confectionery industries in the US and Western Europe.
The other favourable trend for the palm oil industry is in the growing potential of palm oil as a viable alternative to petroleum-based fuel. Palm oil is a suitable environment-friendly substitute as its supply is renewable and fairly consistent and its price is very competitive.
StarBiz: Do you foresee or expect any unfavourable occurrences or events that could have an impact on your business in the near future?
Lee: As has been shown earlier, IOI has taken advantage of the global appeal and multifarious uses of palm oil to establish its presence in different parts of the world. Therefore, there are potentially many different factors or events that may affect its business. However, the positive side to this is that IOI can also turn the negative impact of certain occurrence in one country into positive spin-offs in other countries.
For example, a few months ago, there was a widespread prediction that if the ringgit were re-pegged upwards against the US dollar, the ringgit earnings of plantation companies in Malaysia would decline. To a certain extent, this is correct. However, many people forget that the Malaysian Government will sensibly re-peg the ringgit only if the US dollar weakens considerably and/or if major regional currencies like the Chinese yuan strengthens considerably against the US dollar.
In those scenarios, the higher purchasing power of these regional countries will likely result in increased import and consumption of palm oil. On the other hand, the competitive US dollar may result in increased exports of manufactured goods, some of which will use palm oil from the US.
StarBiz: Moving forward, are you likely to be still expanding your business or the scope of your business ties?
Lee: As you can see, we have expanded considerably in the last few years. Going forward, we would very much like to concentrate on strengthening all such new acquisitions and expansion to ensure they perform optimally within expectations.
Having said that and judging from past experience, there are always investment opportunities that will arise from time to time in the overall palm oil sector due to the continuous discovery of new uses and new markets for palm oil in different parts of the world that may warrant our consideration.
StarBiz: On a personal level, what has been the happiest moment for you so far this year as a top management personnel of your company?
Lee: My happiest moment is to see our group is able to exceed market expectations and perform creditably despite a turbulent external environment during the year.
Our people of various nationalities and in different parts of the world have put in substantial efforts and commitment to grow the group and generate consistent returns for our shareholders and investors. It is therefore a great pleasure to see their efforts and determination well-rewarded by the good results achieved.