KUCHING: Subur Tiasa Holdings Bhd has sunk into the red as its timber and oil palm businesses are both losing money. In the second quarter ended Jan 31, 2019 (2Q-2019), the Sibu-based company posted group pre-tax loss of about RM9.3 million from profit of RM134,000 in 2Q-2018 as revenue slumped to RM73.8 million from RM83.1 million during the same period.
Loss per share widened to 4.61 sen from 0.65 sen.
On a six-month basis, the group’s pre-tax loss was RM8.75 million from profit of RM930,000 in the six months to Jan 31, 2018 as revenue shrank to RM160.7 million from RM194 million.
In the current quarter, timber revenue was down by 11 percent to about RM50 million from RM55.8 million in 2Q-2018 mainly due to lower export sales volume of timber and timber products.
The timber segment’s pre-tax loss increased to RM10.5 million from RM8.7 million or by 21 percent.
However, over the six months’ period to Jan 31, 2019, the segment’s pre-tax loss narrowed to RM14.7 million from RM19.4 million in the preceding year’s corresponding period despite a 23 percent drop in revenue to RM102.6 million from RM133.1 million.
The decrease in losses was mainly because of improved average selling price of timber and timber products, explained Subur Tiasa in notes accompanying its latest financials.
The group is involved in logging operations and reforestation project in Sibu, Bintulu and Kapit regions. Its downstream manufacturing products consist of plywood, particleboard, sawn timber and charcoal.
For the oil palm plantation segment, revenue in 2Q-2019 fell to RM22.3 million from RM26.3 million in 2Q-2018 and the segment suffered pre-tax loss of RM5.5 million as compared to pre-tax profit of RM10.5 million previously.
Over a six-month period, the segment’s revenue declined to RM55.2 million from RM59.2 million or by seven percent while pre-tax profit plunged by 96 percent to RM940,000 from RM23.6 million.
Subur Tiasa attributed the drop in both the revenue and earnings mainly to reduction in fresh fruit bunch (FFB) average selling price by 33 percent and 29 percent respectively from previously.
However, the company said the drop in profit was partially offset by higher FFB sales volume.
The group’s total plantation land bank stood at about 29,000 hectares as at July 31, 2018. The weighted average palm age was 8.6 years old.
Subur Tiasa group is also involved in the provision of towage and transportation services, insurance services, property development and manufacturing and trading of drinking water (others segment).
The others segment put up a better performance with pre-tax profit of RM6.8 million in the current quarter on revenue of about RM1.5 million as compared to loss of RM1.7 million on turnover of RM998,000 previously.
On a six-month basis, this segment returned to the black with pre-tax profit of RM5.1 million from loss of RM3.2 million.
Commenting on prospects, Subur Tiasa said the prices of timber and timber products are expected to sustain in the light of lower production of logs across the state’s timber industry.
“CPO (crude palm oil) price is expected to improve in anticipation of the implementation of biodiesel mandate and an expected rise in demand from key importer India.
“The oil palm plantation segment performance would continue to contribute positively to the group driven by the significant improvement of the FFB yield, oil extraction rate and operational efficiency,” it added.
Subur Tiasa said the group is committed to review and improve group’s strategic transformation plans continuously in order to enhance stakeholder’s value and businesses efficiency.
