LINGUI Developments Bhd expects its performance to improve in the year to June 2006, given the growth in US demand for plywood for its reconstruction efforts after the Katrina disaster, managing director Yaw Chee Ming said.
“We do benefit from the US’ reconstruction efforts. The construction of mobile homes (for refugees) uses a lot of hardwood and plywood.
“We are seeing signs of prices (of plywood) picking up,” he told a press briefing after an AGM in Kuala Lumpur yesterday.
For the year to June 2005, the US accounted for 18% of Lingui’s plywood exports, but the figure is expected to be higher this year due to the requirements of reconstruction, he said.
The company derives 98% of its revenue from timber or timber-based activities, and 90% of its timber or timber-based products are exported.
Japan and South Korea accounted for over half of its plywood exports in the year to June 2005, with the US coming in third.
For logs, Japan constituted 40% of its exports, with China and India accounting for 35% and 20%, respectively.
Yaw is optimistic of the company’s prospects as a result of the growing appetites of India and China for timber and timber-related products, and the pick-up in the Japanese economy, which manufactures premium timber products.
He also defended Lingui’s investment in New Zealand's Hikurangi Forest Farms, in response to a media report that interest payments on this asset continues to be a drag on Lingui’s earnings.
“Investment in New Zealand is for the future, not for immediate gains,” Yaw stressed.
He added that the New Zealand venture is the company’s effort to control the cost of its resources that constitute 60% to 65% of its total cost, which is an important factor in guaranteeing the company’s profit. – AFX-Asia