IOI Corp Bhd’s 32.101%-owned associate Bumitama Agri Ltd said the oil palm plantation company will continue to invest in its infrastructure, and instead of expanding into new planting, the group will start to look into replanting areas with below-average yields and higher-than-expected costs to drive fresh fruit bunch production growth to ensure efficient use of the company’s assets.
Bumitama executive chairman and chief executive officer Lim Gunawan Hariyanto said in Bumitama’s latest annual report, which was filed with the Singapore Exchange today, that although financially stronger, Bumitama will not be complacent and will remain vigilant and monitor risks in the ever-changing business environment as the global economy contends with the impact of the Covid-19 pandemic.
"Thus, we will continue to enhance our capacity to create value by improving our performance across the value chain, from using the best seeds for replanting to good plantation management practices, increasing yield and extraction rates.
"We have expanded the capacity of our mills by an additional 60 MT per hour, bringing total capacity in the end of FY2020 (ended Dec 31) to 6.03 million MT.
"When the Covid-19 pandemic broke out in the beginning of FY2020, we were concerned about the safety and well-being of our employees and their families, and its impact on our operations,” Lim said.
Looking ahead, Lim said Bumitama will also continue to invest in research and development to reduce toxicity through the responsible use of pesticides and to raise the standards of good agricultural practices.
"Our new tissue culture laboratory, which will soon be commissioned, will be able to supply cultured seeds with better yield potential for our replanting programmes,” he claimed.
Citing a report by the Council of Palm Oil Producing Countries (CPOPC), Lim said the CPOPC report indicates that palm oil prices are projected to remain robust in the first half of 2021, supported by strong demand for edible oils and tighter supply of alternative oils such as soybean and sunflower oils.
"Nonetheless, the price outlook for 2021 will also depend on other factors such as weather conditions, although the La Nina effect is expected to remain neutral. On the whole, we remain positive on the longer-term fundamental strength of the palm oil industry,” he said.
On Bursa Malaysia today, IOI Corp shares were traded unchanged at RM4.21 at 11:44am for a market value of about RM26.4 billion.
IOI Corp has 6.27 billion issued shares, according to the company’s latest quarterly financial report.
Source: The Edge Markets
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