KUCHING: Rimbunan Sawit Bhd  will undertake a series of short-to-medium term measures to beef up crop production and yield of its loss-making oil palm plantations.

Managing director Tiong Chiong Ie said the group plans to implement a recovery and rehabilitation programme to improve the conditions of these plantations.

Among the measures is the deployment of additional resources, such as machinery, equipment and human resources, to maximise fresh fruit bunch (FFB) crop recovery in the most productive blocks of the oil palm estates.

The group will upgrade, repair and carry out maintenance works on the main and field roads to facilitate accessibility to and from the plantations.

To attract more workers to its plantations, Tiong said Rimbuan Sawit would establish attractive field work piece rates plus incentives, as well as refurbish or renovate the existing workers’ quarters to upgrade their amenities and facilities or construct new workers’ accommodation.

Rimbunan Sawit group owns 16 oil palm estates in Kuching, Sibu and Miri with a total planted area of 42,478ha, representing about 60.76% of the group’s total landbank of 69,909ha.

As at Dec 31, 2022, about 49% or 20,849 ha of the oil palms were in prime mature age cluster (eight to 19 years), 17,794ha or nearly 42% were old mature (over 20 years), 1,259 ha (young mature) and 2,576 ha (immature).

The group also owns and operates three palm oil mills.

Via wholly-owned subsidiaries R.H. Plantations Sdn Bhd and Jayamax Plantation Sdn Bhd, Rimbunan Sawit has entered into sales and purchase agreements with Mahawangsa Sungai Bok Plantation Sdn Bhd (formerly known as Hua Seng Plantation Sdn Bhd) (MSBPSB) to dispose of two loss-making oil palm plantations known as the Selangor Estate and Jayamax Estate in Miri Division, northern Sarawak for a total of RM165mil in cash.

The Selangor Estate covers 4,857ha and Jayamax Estate 5,077.66ha, which also include buildings.

In a circular to shareholders on the proposed disposal of the Selangor Estate and Jayamax Estate, Tiong said besides these two estates, the group has other loss-making oil palm plantations.

However, he did not disclose the number and size.

Rimbunan Sawit shareholders will vote on the proposed disposals at an EGM on April 8.

According to Tiong, the Selangor Estate and Jayamax Estate had been loss-making for three consecutive financial years up to 2022.

This was mainly because of shortage of oil palm harvesters as a result of travel restrictions and border closures imposed by the federal government to curb the spread of Covid-19 pandemic, as well as adverse weather conditions arising from the El Nino phenomenon in 2020.

This, he pointed out, had resulted in low FFB production and yield of the estates.

As both the Selangor Estate and Jayamax Estate are located at the boundary of the group’s oil palm estates in Miri, Tiong said their disposals are expected to cause minimal disruption to the operations of the group’s other oil palm estates within the region.

“Furthermore, given that the Selangor Estate and Jayamax Estate are adjacent to each other, disposing them together would enable MSBPSB to achieve economies of scale by operating the Selangor Estate and Jayamax Estate together,” he added.

The sales of the Selangor Estate and Jayamax Estate would reduce Rimbunan Sawit group ‘s total planted landbank by 17.99% or 7,643 ha.

Rimbunan Sawit group had suffered net losses for five consecutive years to 2022 but the losses had been reduced substantially from RM148.7mil in 2018 (revenue: RM338.7mil) to RM62.8mil (RM284.7mil) in 2019, to RM56.1mil (RM385.5mil) in 2020,to RM6.98mil (RM541.5mil) in 2021 and RM5.8mil (675.9mil) in 2022.

In 2023, the group made a turnaround and returned to the black with profit of RM24.5mil on revenue of RM507.8mil.

Tiong said the proposed disposals of the Selangor Estate and Jayamax Estate represents an opportunity for the group to unlock the value at a premium to their respective market value.

The group is expected to record a pro forma gain on disposal of about RM77.94mil.

From the proceeds of the sales, he said the money would be utilised for partial repayment of the group’s interest-bearing borrowings of about RM86.11mil.

This is expected to result in an interest cost savings of about RM3.99mil per annum and lower the group’s gearing level to 0.61 times from 0.99 times.

“In addition, part of the proceeds of the proposed disposals will be channelled towards the group’s business operations, as it will be utilised to fund new planting and replanting of oil palms. In that regard, the group will be able to conserve its internally generated funds to strengthen its financial position.”Going forward, Tiong said the group will seek opportunities to replenish and expand its plantation assets.

“The group takes cognisance that the foreign worker availability in Malaysia is gradually improving and expects healthy soil moisture conditions and lower-flooding disruptions to support output of its palm oil products, which bodes well for the performance of its oil palm estates in the longer term.

“Furthermore, with expectations of firmer palm oil prices and greater demand of palm oil products from the market, coupled with the group’s continuous efforts to optimise its operations and costs to drive greater efficiency and productivity, the group is cautiously optimistic on the outlook of the oil palm plantation segment as well as the financial performance of the group,” he added.

https://www.thestar.com.my/business/business-news/2024/04/01/rimbunan-sawit-to-beef-up-crop-production-and-yield

Sumber : The Star