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 FimaCorp expects RM40m profit from Indonesian palm oil by 2012

13/3/07 (The Edge Daily)  - Fima Corporation Bhd (FimaCorp) expects its oil palm plantation in Kalimantan, Indonesia to contribute RM30-RM40 million in net profit by its financial year ending March 31, 2012 (FY12), its managing director Roslan Hamir said.

He said the plantation business' contribution would represent about half of its expected net profit then.

It also expects the plantation business in Indonesia to break even by FY09 and to register a net profit of about RM3 million and RM12 million in FY10 and FY11 respectively, he told reporters after the company’s EGM in Kuala Lumpur yesterday.

Roslan said the improvement in results was expected due to the anticipated increase in the production of fresh fruit bunches, enhanced productivitiy and the continuing strength of palm oil prices.

However, FimaCorp is expecting a loss of RM4.8 million in FY08 due to the depreciation of assets and low yield as the plantation it acquired was still maturing, he added.

During the EGM, FimaCorp received shareholders’ approval for its proposed acquisition of an 80% stake in PT Nunukan Jaya Lestari for RM96 million. Nunukan has more than 19,000ha of land, of which only 6,500ha is planted with oil palm.

Roslan said the company would be cultivating 2,000ha of land every year to increase its size of planted land to 10,500ha by 2009 and it would invest another RM35 million over the next two years to develop the land.

FimaCorp's core activity now is the printing of security and confidential documents.

On the company’s venture into palm oil plantation, he said it was to diversify the company’s income base. “Malaysia is too small a country to only do the printing of security documents.”

“We believe the time is perfect. The valuation (for the purchase) was done when CPO (crude palm oil) price was RM1,300 per tonne,” he added.

Roslan said the CPO price is now hovering above RM1,800 per tonne and the valuation for the acquisition would be much higher if it was done later.

He also said FimaCorp would capitalise on the expertise of its holding company, Kumpulan Fima Bhd, for the management of the oil palm plantation.

Kumpulan Fima has the experience in managing palm oil plantations prior to the disposal of its plantation assets following the Asian financial crisis, he said.

Asked if it would also venture into the production of palm oil-based biofuel, Roslan said it would initially focus on ensuring the success of its plantation in Indonesia in the first two years.

Malaysian Palm Oil Board ( MPOB ) Lot 6, SS6, Jalan Perbandaran, 47301 Kelana Jaya, Selangor Darul Ehsan, MALAYSIA.
Tel : 603 - 7802 2800 || Fax : 603 - 7803 3533