TDM aims to double revenue in 5 to 7 years

by **Cals** Wed 22 Jan 2014, 19:13

Business & Markets 2014

Written by Janice Melissa Thean of theedgemalaysia.com

Wednesday, 22 January 2014 10:01

KUALA LUMPUR: Terengganu-based TDM Bhd expects to double its revenue in five to seven years, with its increasingly mature oil palm trees being harvested at its plantations in West Kalimantan, Indonesia.

Its group chief executive officer Badrul Hisham Mahari said its 40,000ha of plantations in Nanga Pinoh are expected to contribute between 40% and 45% to the plantation and healthcare group’s net profit in the next five years.

Currently, 12,000ha have been planted though the oil palm trees are still young.

“[An additional] 400ha to 500ha [of the palm area] will mature this year and will start producing fruits. This means that our outlook is very good for the coming three to five years,” Badrul told reporters after the award of a Roundtable on Sustainable Palm Oil (RSPO) certification to its plantation arm, TDM Plantation Sdn Bhd, here yesterday.

“Our target is to eventually double group revenue through our investment in Kalimantan and I think we should get there in about five to seven years,” he said.

The group posted a lower net profit of RM101.12 million for the financial year ended Dec 31, 2012 as its revenue declined to RM455.26 million. For the nine months ended Sept 30, 2013, net profit and revenue were also down 68% and 17% to RM21.33 million and RM272.43 million respectively from a year ago, due to lower plantation revenue.

TDM Plantation is aiming for a planting target of about 5,000ha per year, but Badrul admitted that it is slightly behind schedule, only achieving between 3,000ha and 5,000ha a year.

Over the last seven years, TDM has invested RM250 million to RM300 million to develop the Kalimantan estate.

It is also spending RM80 million to build a 60-tonne palm oil mill there to correspond with its first harvest which is expected by 2015.

The group is working to improve its fresh fruit bunch (FFB) yield. Presently, it has an average FFB yield of 19.5 tonnes per hectare.

Yields are lower than the Malaysian standard because the 32,000ha plantations in Terengganu have uneven terrain. This is not uncommon in the east coast.

“We are targeting about 20 to 22 tonnes FFB per hectare this year. We expect nothing less than 25 tonnes per hectare in Kalimantan,” said TDM group chairman Datuk Roslan Awang Chik.

In line with its aim to double its revenue, TDM is expecting its healthcare division to grow two folds.

The group is in the process of refurbishing its 150-bed Kuantan Medical Centre, which is slated to be operational in the second half of this year.

“The [130-bed] Kuala Terengganu Specialist Hospital is [also] currently under construction and is on track to start operations in 24 months,” Badrul said, adding that it will cost RM150 million and RM200 million per hospital.

TDM Plantation currently contributes about 90% to group net profit, with the rest from the healthcare division.

Badrul estimates the price of crude palm oil (CPO) to recover to between RM2,600 per tonne and RM2,700 per tonne this year.

The three-month futures CPO contract currently trades at RM2,560 per tonne.

As at November 2013, TDM’s mills and estates were 100% certified sustainable by RSPO.

“Since we started this programme in 2004, there has been an upward trend in FFB yield improvement of about 30%,” said Badrul.

This article first appeared in The Edge Financial Daily, on January 22, 2014.