Ta Ann sees improved earnings for timber segment amid shortage of raw materials

KUALA LUMPUR (Aug 13): Timber and oil palm player Ta Ann Holdings Bhd said it is optimistic of an improved performance from its timber segment for the current year.

This is mainly due to a shortage of raw materials and increase in housing demand in Australia, the US and other timber-consuming countries, the group said in a bourse filing yesterday.

“Moreover, as all the logs we use as raw materials for our wood-based products come from our sustainably managed MTCS-PEFC (Malaysian Timber Certification Scheme-Programme for the Endorsement of Forest Certification) certified forest management units, our timber division is well positioned to meet the anticipated demand recovery in plywood.

“This, coupled with the prudent cost control measures we have put in place, are the reasons that we have been able to sustain our logs and plywood production,” said Ta Ann.

Turning to crude palm oil (CPO), the group noted that earlier this year, the market consensus was that prices will soften after the second half of 2021.

“However, the opposite has proven to be true and CPO prices surged up to RM4,600 per tonne from RM3,800 in June 2021, before moving up in the beginning of July 2021. We expect the present price level to be sustained well into 2022.

“Moving forward, we foresee the same will enable us to further sustain our production level and drive the earnings momentum of our group,” Ta Ann added.

For the year ended Dec 31, 2020 (FY20), Ta Ann’s net profit fell 16.25% to RM45.09 million, from RM53.84 million a year earlier, mainly due to a drop in the average selling price of plywood products by 11% and lower achievement of sales volume for export logs, CPO and fresh fruit bunches by 37%, 13% and 24% respectively. Revenue rose to RM1.22 billion from RM945.69 million.

The group’s timber segment reported revenue of RM306.95 million, up 3.24% from RM297.32 million in FY19 while its oil palm segment’s revenue climbed 40.45% to RM910.44 million from RM648.14 million.

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