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Performance Review
exercise is now being carried out by an
independent consultant and is expected
to be completed in this current year.
During the year, the Group’s subsidiary,
FCB Plantation Holdings Sdn Bhd
(“FCBPH”) completed the acquisition of
Java Plantations Sdn Bhd (now known
as FCB Eastern Plantations Sdn Bhd)
(“JPSB”). JPSB holds an 80% interest in
Ladang Bunga Tanjong Sdn Bhd (“LBT”),
which operates an oil palm plantation in
Jeli, Kelantan measuring approximately
3,290 acres or 1,331 hectares. LBT is
located in the proximity of our Ladang
Dabong and Ladang Aring estates,
enabling us to achieve economies of
scale and operational efficiencies.
Rehabilitation works on 566 hectares
thereat have already commenced.
Field upkeep and maintenance as well
as spraying and manuring work are
progressing well currently with more
than 50% completed as at the date of
this Report.
Replanting works commenced soon
after the take over and is expected to
complete by the next financial year.
To-date approximately 150 hectares
have been cleared and terraced. Other
infrastructure works such road and
bridges upgrading and repairs are also
being carried out. GPS mapping system
was employed for pre planning, roads
construction and terrace positioning.
This would enable estate management
to efficiently plan for and maximise the
planting density of the potential planting
area as well as determining an efficient
road system for eventual harvesting.
Planting of mucuna bracteata, a type
of leguminous cover crop, will be
undertaken soon after the areas have
been cleared to prevent erosion, improve
soil fertility and conserve soil moisture.
Consistent with the Group’s policy to
work with and contribute positively
to the communities in which we have
operations, most of the workforce
employed to perform the aforementioned
works are carried out by locals who live
in neighbouring villages and towns. Local
resourcing will continue to be our priority.
Existing
workers
quarters
have
been refurbished and upgraded to
accommodate up to 50 workers. In the
meantime, the construction of 8 new
quarters that can accommodate a further
64 workers is in progress and will be
completed in this current financial year.
During the year under review, the Division
spent RM24.77 million on CAPEX, largely
towards plantation development works,
purchase/replacements of fixed assets as
well as the construction of new housing
complexes. Presently our housing
complexes can accommodate 2,248
workers as a means to address ongoing
labour shortages. We are also upgrading
the IT systems of our estates which
would provide the Group’s head office
more visibility and control of operations at
various sites.
Pineapple
Total area planted with pineapple in our
estates in Johor totalled 171 hectares
(or 422 acres). For the year under review,
the pineapple harvest increased by 3.8%
to 3,374 MT, up from 3,249 MT in the
previous year.
Outlook
It is pleasing to note that the benefits of
our greenfield acquisitions over recent
years are gradually being realised. We
expect the Division’s revenue to continue
to improve on the back of the projected
upward trend in FFB production as more
areas in the Group’s greenfield estates
attain maturity. Our earnings however
will experience some pressure in the
near term as a result of the required
expenditure in developing the greenfield
estates. The returns will take hold once
the development works are completed
and margins improve.
The International Monetary Fund predicts
global growth to rise from 3.8% in 2017
to 3.9% in 2018-2019; the fastest pace
in 6 years. This will inevitably lead to a
proportional increase in consumption,
particularly the demand for food. As food
consumption rises, so too will the demand
for palm oil. However, we may face major
challenges on the supply side due to
ongoing industry labour shortages and
the high replanting activities in Indonesia.
The Board believes that on balance,
this sector will continue to benefit from
the growing demand given that palm
oil is a significant and versatile raw
material for both food and non-food (i.e.
oleochemicals and biofuel) industries and
is confident of its sustainable growth over
the long-term.
Plantation Division