Update Felda unit MSM to "revisit" sugar prices, sees lower margins

by **Cals** Thu 12 Jun 2014, 03:00

Update Felda unit MSM to "revisit" sugar prices, sees lower margins

Business & Markets 2014

Written by Wei Lynn Tang of theedgemalaysia.com

Wednesday, 11 June 2014 13:56

KUALA LUMPUR (June 11): MSM Malaysia Holdings Bhd will "revisit" sugar prices, a move which may affect the sugar producer's profit margin, according to President and Group CEO Datuk Sheikh Awab Abod.

Speaking to the press after MSM's annual general meeting today, Sheikh Awab said MSM, a 51%-owned subsidiary of plantation group Felda Global Ventures Holdings Bhd, foresees lower profit margin this year compared to last year.

This comes on the heels of new influx of sugar into the market primarily from Thailand, higher sugar prices with the removal of sugar subsidy, and imports being permitted into Malaysia.

Sheikh Awab said MSM's sugar sales volume this year was seen similar as last year.

Sheikh Awab did not divulge the margin cut quantum MSM was expecting. In the first quarter ended March 31, 2014 (1QFY14), MSM's net margin stood at 11% compared with 12% in 1QFY13.

He said MSM was looking for new revenue streams and ways to reduce costs. This included going downstream where the group was looking into trading and chartering to control transportation costs.

"Over the next two to three years, the group will (also) be exploring foreign markets via strategic acquisitions or investments to revive upstream activities," said Sheikh Awab.

On regional expansion plans, Sheikh Awab said the group's main focus would be in the under-served sugar industry of Indonesia and Indochina. For FY13, exports accounted for 21% of MSM's revenue.

"We're talking to at least three others for possible M&As (merger and acquisition)... We don't want MSM to be where it is now," he said, noting that M&As would be with global players.