KUCHING: WTK Holdings Bhd
has exited from its loss-making plywood manufacturing business undertaken by its subsidiary Cairnfield Sdn Bhd.
Cairnfield had ceased its plywood-related manufacturing operation in Bintulu on Jan 1 this year.
The WTK group is mainly involved in logging activities, owning eight timber concessions covering some 402,000ha in Sarawak.
The group is also into a reforestation project, with an area of 62,000ha, in cultivating fast-grown commercial timber species.
According to WTK, its timber business has been a declining revenue contributor to the group in recent financial years because of the soft market demand and stricter operational requirements related to timber certification.
Another challenge is the competition from Japanese softwood plywood manufacturers.
“These challenges have reduced the timber segment’s financial viability and made it less strategic for the group’s future growth,” explained WTK when releasing its financial year 2024 (FY24) financial results recently.
For FY24 ended Dec 31, 2024, WTK’s timber segment incurred a pre-tax loss of about RM40.4mil on the back of RM203.9mil in revenue.
The timber segment also suffered a pre-tax loss of RM50.4mil with a revenue of RM184.4mil in 2023.
In the fourth quarter of FY24 or 4Q24, WTK booked an impairment loss on property, plant and equipment of RM8.4mil in relation to the cessation of the plywood manufacturing business, and loss in fair value change of timber biological assets of RM7.4mil.
About 68% of the group’s plywood export went to Japan and the remaining 32% to Taiwan in 2023. The production volume and sales in 2024 are not yet available.
Meanwhile, WTK said it has obtained forest management certification (FMC) under the Malaysian Timber Certification Scheme (MTCS) – Programme for the Endorsement of Forest Certification (PEFC) for two concessions covering a total of 91,203ha.
With the FMC certificates, the Sarawak Forestry Department has granted two forest timber licences with a 30-year tenure to the group.
The group intends to obtain FMC certification for its remaining forest management units by December 2025.
Given the challenges faced by the timber and tapes manufacturing business, WTK said the group is undergoing a strategic shift to focus on more sustainable and profitable businesses.
“The group aims to prioritise its plantation and food business, which have demonstrated stronger growth potential and profitability in recent years,” it added.
In FY24, the plantation segment reported a sharp increase in revenue to RM295.3mil (FY23: RM225.9mil) and posted a pre-tax profit of RM18.75mil (FY23: RM22.3mil) while the food segment’s revenue surged to RM103.7mil, driving its pre-tax profit to RM6mil.
In its efforts to expand the size of its oil palm plantations, cash-rich WTK had spent over RM523mil since 2020 to acquire three estates and an oil palm mill in Sarawak.
The group paid RM85mil for an oil palm estate spanning 4,698ha from Rimbunan Sawit Bhd, RM250mil for BHB Sdn Bhd’s estate (4,217ha planted out of a land bank of 5.043ha) and an oil palm mill in Miri, and RM188.8mil for Durafarm Sdn Bhd’s estate (4,482ha planted out of a land bank of 5,040ha).
It noted the group’s frozen food business has also been bolstered with the recent expansion of its cold room capacity and opening of more retail outlets.
