KUCHING: Jaya Tiasa Holdings Bhd is upbeat on the prospects of its logging business going forward in view of several positive factors.
The Sibu-based timber/plantation giant said it was expecting positive performance of its timber business with the improvement in weather condition, which brought relief to the production and transportation of logs.
Another plus factor is the stable demand of logs from India, the largest buyer of Sarawak timber, for its infrastructure development requirements.
Jaya Tiasa, one of the most established loggers in Sarawak, has forest concession area covering more than 713,200ha, and monthly extraction quota of some 94,500 cu m.
In the 12 months to June 30, 2014 (FY14), Jaya Tiasa said the group recorded a 18% increase in average selling price of logs on a year-on-year basis while average selling price of plywood surged by 8% during the same period. However, the group recorded lower sales volume of both logs and plywood during the period under review because of tight supply.
In FY14, Jaya Tiasa chalked up impressive group’s net profit of RM59.6mil, which was some 145% higher than RM24.4mil in FY13 despite lower revenue of RM1.03bil, down from RM1.05bil previously due to lower quantities of logs and plywood sold.
The higher earnings were also contributed by a 21% increase in the sales volume of fresh fruit bunches (FFBs) and lower production cost due to higher FFB production of 15%, Jaya Tiasa said in explanatory notes to its latest fnancials. The group has oil palm estates covering more than 63,500ha of which some 56,000ha have matured.
In FY14, wood processing business (plywood and other timber products) was the single biggest contributor to group profits, contributing RM360.3mil, followed by logs (RM351.5mil) and oil palm operations (RM322.5mil). But it was the sales of logs which contributed the bulk of group’s pre-tax profit, amounting to RM63.8mil. This was sharply higher than RM23mil on revenue of RM397mil in FY13, followed by oil palm operations (RM39.9mil) and wood processing (RM18.5mil).
In the fourth quarter, group’s net profit stood at RM10.8mil on turnover of RM271.7mil, which compared favourably with RM6.2mil and RM257.2mil respectively in the previous corresponding quarter.
The higher revenue and earnings were attributed to a 16% increase in cruide palm oil (CPO) sales volume as well as a 24% and 14% improvement in FFB and CPO average selling prices respectively.
While Jaya Tiasa is optimistic about the market outlook for the timber business, it takes a cautious outlook for its oil palm business due to bumper supply of oilseeds, rising palm oil stockpile and slow biofuels take-up progress.
“Despite the improvement in the oil extraction rate and FFB production yield which will translate into sustainable growth for the group, the performance for the next financial year would be highly dependent upon the prevailing CPO market prices,” added the company.