Tuesday, January 21

BLD strives to keep costs low in midst of challenging outlook

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KUCHING: BLD Plantation Bhd (BLD) aims to keep its costs low amidst a challenging outlook for the palm oil industry as crude palm oil (CPO) prices remain lacklustre.

According to executive chairman Datuk Henry Lau, global demand for palm oil and its related products have not been as encouraging as expected.

This was on the back of increasing costs of operations including minimum wages, goods and services which Lau said were generally on the uptrend.

“Basically, the oil palm industry now is under a lot of pressure. (CPO) pricing is our biggest concern. We expect the supply side to put pressure on demand,” he said during BLD’s 13th Annual General Meeting (AGM) here yesterday.

He added that demand for CPO and its related products from countries such as China and India are not increasing as expected.

During BLD’s AGM, a first and final single-tier dividend of four sen per share for the year ended December 31, 2014 was approved and will be paid to shareholders on July 31, 2015.

Low prices for palm oil products remain a major challenge for the industry in recent years, BLD highlighted in its Annual Report 2014.

The company strives to keep production costs low and at the same time increase crop production and enhance mill efficiency in terms of extraction rate as well as to increase in planted area on its remaining land.

To note, BLD has total planted area of about 27,600 hectares of which about 91 per cent is in the maturity stage, consisting of 75 per cent young and prime palm while 25 per cent is old-aged palm.

“From this, the group produced about 125,000 metric tonnes of CPO which is an increase of seven per cent from last year,” BLD outlined.

“Meanwhile, the group’s two palm oil mills are currently operating at their installed capacity during the financial year under review.”

Looking ahead, Lau said BLD is expected to carry on the development of remaining peat land which will be done within the next two years.

Lau told reporters after the AGM that planting for 20,000 hectares of peat land will be completed within the next two years.

Currently, 6,000ha has been planted.

Meanwhile, there are proposed plans for replanting projects in the coming years.

Nevertheless,BLD affirmed that the palm oil industry will remain an interesting investment from the perspective of several themes such as rising food demands due to population increase and tusing standards of living.

Also, rising Asian economies, particularly India and China, and increasing use of biofuel where palm oil is used as feedstock for biodiesel production.

To note, BLD’s exports mostly going to China and India.

When asked on the group’s plan to look into new products such as oleochemicals, Lau said it was still under study.

“It is a new area and we have to be very thorough in our understanding before we embark on it. It will require more time.”