Ta Ann Holdings Bhd expects its log production to continue falling this year due to shortage of supply.
The company plans to overcome the shortage by increasing the harvesting of its matured planted forests for downstream plywood manufacturing, said Datuk Wong Kuo Hea, the company’s group managing director and chief executive officer at its AGM,
“Moreover, we have adjusted our plywood production according to the anticipated log supplies and we will maintain plywood production at this level for sustainability,” he added.
Log production by the group for the financial year 2017 fell by 46 per cent compared to 2016, he explained, so had export volume, which was 54 per cent lower due to reduction of export quota by the government from 30 per cent to 20 per cent as effective from July 2017, to maintain sustainable production levels in the long term.
As a result, the group’s log production was lowered by 50 per cent compared to 2016.
Whether fall in export volume would persist further this year following the reduction in export quota, Wong said they would only know in mid-June when the changes in forestry policies and export quota will be announced by the government.
“Unfortunately, these are government policies that we have to follow even though log exports will generate good profit for the group,” he said.
India will remain the group’s major buyer with export volume expected to hold strong.
Wong said the export selling price for the group saw a 65 per cent increase, which translated to US$370 cubic metre on average in March this year compared to March 2017.
Plywood production volume dropped by 23 per cent last year due to shortage of log supply.
To offset the decline in log production, the company had decided to utilise more plantation logs and imported eucalyptus veneer for plywood production and develop new markets for plantation log products
Its plywood division suffered a loss of US$6.1million last year compared to a profit before tax of US$1.65million the previous year.
Separately, executive chairman Datuk Amar Abdul Hamed Sepawi said the group revenue for 2017 of US$0.29 billion saw pre-tax profit increase by 9 per cent to US$47.98 million from US$44.03 million in 2016.
Net profit for 2017, he stated, was US$35.65 million.
Source: The Star