SIBU: Ta Ann Holdings Bhd expects that its log production will continue to decline this year due to the shortage of supply.
At the company’s AGM, group managing director and chief executive officer Datuk Wong Kuo Hea, however. said it would overcome the shortage of log supply this year by increasing the harvesting of its matured planted forests for downstream plywood manufacturing.
“Moreover, we have adjusted our plywood production according to the anticipated log supplies and we will maintain plywood production at this level for sustainability,” he added.
The group’s log production for the financial year 2017 declined by 46% as compared to the previous year, he explained.
He attributed this to the transitional period of operation toward forest management certification and implementation of sustainable annual allowable cut.
“Export volume was 54% lower due to reduction of export quota from 30% to 20% effective July 2017,” he said.
Wong said in order to maintain long-term, sustainable production levels, which were stipulated by the certification, the group’s log production was reduced by 50% compared to 2016.
As to whether export volume would decline further this year following the reduction in export quota from 30% to 20%, he said this would only be known in mid-June when the changes in forestry policies and export quota will be announced by the government.
“Unfortunately, these are government policies that we have to follow even though log exports will generate good profit for the group,” he said.
India, he added, will remain the group’s major buyer with export volume expected to remain strong.
Wong said the export selling price for the group achieved US$370 cubic metre on average in March this year compared to March 2017, a 65% increase.
He also reported that its plywood production volume declined by 23% last year due to shortage of log supply.
“To offset the decline in log production, the company has strategised in utilising more plantation logs and imported eucalyptus veneer for plywood production and develop new markets for plantation log products,” he said.
Its plywood division recorded a loss of RM24.798 mil last year compared to a profit before tax of RM6.583mil the previous year.
Separately, executive chairman Datuk Amar Abdul Hamed Sepawi said the group revenue for 2017 of RM1.17bil saw pre-tax profit increase by 9% to RM191.49mil from RM175.71mil in 2016.
Net profit for 2017, he added, was RM142.27mil.