Wood products likely to see demand again

KUCHING: The demand for timber products, like plywood, which have enjoyed firm prices, are expected to pick up again towards the end of the year, according to a major timber firm.

Subur Tiasa Holdings Bhd said demand would resume in anticipation of an uptrend in construction activities from its major markets, such as Japan.

“Timber prices are not expected to experience any downside volatility following a log export ban imposed by Myanmar in April and in view of the increased demand from timber consuming countries,” Subur Tiasa said when commenting on market outlook for logs and timber products going forward.

Myanmar, the fifth largest tropical log producer and third largest exporter in the Asia-Pacific region, banned all log exports to curb smuggling activities and to conserve its forests.

Subur Tiasa, controlled by the diversified Rimbunan Hijau group, had benefited greatly from the firm prices of logs and timber products in the past 12 months, and this had boosted the company’s profitability.

For the financial year ended July 31,2 014 (FY14), Subur Tiasa group’s pre-tax profit leapt by 154% to RM50.98mil, from RM20.1mil in FY13, as revenue jumped to RM887.2mil from RM768.8mil. Earnings per share grew to 20.6sen from 8.6sen.

“The improvement in overall results was mainly attributed to revenue growth from the logging, manufacturing and plantation segments,” the company said in a filing with Bursa Malaysia, adding that recovery in average selling prices across all segments of logs, timber products (plywood and sawn timber) and crude palm oil (CPO) prices was recorded.

In FY14, the manufacturing segment’s revenue rose to RM437.5mil (RM416.3mil in FY13), logging segment’s turnover soared to RM402.3mil (RM317.4mil) while revenue from the plantation segment climbed to RM46.3mil (RM34.3mil). The pre-tax profit of the manufacturing segment swelled to RM26.9mil (RM14.4mil in FY13), logging segment more than tripled to RM17.2mil (RM5.3mil) while that of the plantation segment increased by nearly fourfold to RM6.46mil (RM1.65mil).

In the fourth quarter, Subur Tiasa posted group’s pre-tax profit of RM15.4mil on revenue of RM244.3mil, which were improvements from RM9.9mil and RM175.8mil respectively a year ago.

Pre-tax profit from logging and reforestation segment surged by 250% to RM11.6mil during the quarter under review.

Subur Tiasa said the group had reported a 20% jump in the harvested volume of fresh fruit bunches (FFBs) in FY14 compared with FY13 in line with progressive increase in maturity profile of its oil palm plantations and crops’ yields.

“The group will continue to be resilient and capitalise on strategic streamlining of operations in an integrated and sustainable manner, strengthening marketing strategies concurrent with effective cost management while expanding on growth momentum without compromising on governance and risk management,” it said.

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