Jaya Tiasa benefits from firmer tropical log and plywood prices

KUCHING: Firmer tropical log and plywood prices have benefited Jaya Tiasa Holdings Bhd greatly as evident by a sharp increase in its earnings.

In the second quarter to Dec 31, 2013, the group pre-tax profit shot up to RM29.7mil, which was more than 10 times higher than RM2.2mil in the corresponding period in 2012. This was achieved despite a 5% drop in group revenue to RM272mil from RM286.2mil.

“The higher pre-tax profit was contributed by a better margin of 22% and 7% increase in log and plywood average selling prices respectively,” Jaya Tiasa said in notes accompanying its latest quarterly results.

Sales of logs brought in pre-tax profit of RM40.4mil on turnover of RM170.1mil against a pre-tax loss of RM5.5mil on revenue of RM203.9mil in the October-December quarter in 2012.

The wood processing segment (timber products) recorded higher pre-tax profit of RM12mil on revenue of RM183.8mil as compared with RM9.4mil and RM207.9mil respectively in the same period.

The lower revenue from both log and plywood segments was due to a 32% and 20% cut in their sales volumes respectively.

During the quarter under review, the group reported a 21% increase in fresh fruit bunches (FFB) production on lower production cost.

In the first six months of the current financial year ending June 30, 2014, Jaya Tiasa posted an impressive group’s pre-tax profit of RM55.7mil, which was about 170% higher than RM20.4mil recorded a year ago despite lower revenue of RM517.4mil as compared with RM560.6mil or down by 7.7%.

“The decrease in total revenue was due to a 31% and 20% drop in log and plywood sales volume respectively and a 17% fall in the average selling price of crude palm oil (CPO).

“Better results in pre-tax profits were mainly due to 20% and 9% increase in log and plywood average selling prices respectively, and lower FFB cost of production resulted from the 20% increase in FFB production volume,” said the company.

Commenting on prospects, Jaya Tiasa said the outlook for the group timber business was expected to remain positive in view of Japan and India’s policy in focusing on the construction sector and infrastructure development, leading to strong demand for log and wood products.

“CPO prices are expected to firm up steadily due to lower palm oil production from the neighbouring country as a result of rainfall deficit over the past two years.

“Lower global inventories level coupled with news of aggressive biodiesel uptake mandate will further strengthen the CPO prices.

“Going forward, we expect the oil palm division to perform well in the remaining quarters,” said Jaya Tiasa.

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