KUALA LUMPUR: TH PLANTATIONS Bhd foresees potential revenue upside this year following plans to dispose of a few non-strategic and underperforming assets worth RM150 million.
Chief executive officer Datuk Seri Zainal Azwar Aminuddin said the rationalisation exercises had started to bear fruit and the prolonged bearish phase was over.
The company aims to pare down gearing level to 0.47-0.5 times this year.
“About 60 to 65 per cent of our mature area is made up of young and prime estates, with more coming into maturity in the next few years, promising a steady revenue growth and higher yielding patterns towards 2025 and beyond. Only five per cent of our plantation is considered old.
“We expect 10 per cent higher fresh fruit bunch production at 841,000 tonnes compared with last year. Crude palm oil prices are expected to normalise to sustainable levels of between RM2,500 and RM2,700 a tonne.
“We would continue with our rationalisation exercises to keep our gearing level down to maintain good earnings margin level and this includes disposing of non-core, non-strategic and non-performing estate assets,” he said at the company’s annual general meeting, here, yesterday.
The plantation arm of Lembaga Tabung Haji, however, is well aware of industry challenges, including higher production inputs and labour costs.
On the back of its rationalisation exercises, its oil palms now have an average maturity age of 12 years, but Zainal said TH Plantations aimed to bring the age profile down to 10 years.
The company sold 2,819.27ha of oil palm estate land in Negri Sembilan as well as a palm oil mill for RM152 million last year to pare down debts.
As a result, it recorded 137 per cent increase in profit after tax and minority interests in its financial year ended December 2016 to RM147.1 compared with the same period a year ago.