MKH Annual Report 2017

The Plantation division recorded a significant increase in revenue from RM206.0 million last year to RM260.5 million for the year under review. However, pre-tax profit declined from RM63.1 million last year to RM 14.9 million this year, representing about 76.3%. The fluctuations in numbers are explained as follows: • The average CPO price of RM2,530 per metric ton as compared to an average of RM2,050 which represents about 23% increase which boosted revenue; • The volume of CPO which increased from 87,200 MT in 2016 to 90,600 MT this year, representing an increase of about 4%, also contributed to the increase in revenue; • Although the volume of Palm Kernel declined by close to 2,050 MT over the period, the increase in average selling price of Palm Kernel from RM 1,604 per MT in 2016 to RM2,172 per MT this year more than offset the effects of reduction in volume sold; • Inclusion of unrealised foreign exchange losses of RM7.2 million as compared to unrealised foreign exchange gains of RM39.5 million last year; • The lower average oil extraction rate of 20.3% compared to 22.0%, caused by the La Nina effects of heavier rainfall, which raised the moisture content of the fresh fruit bunches, further dented the profit before tax of the division. The division is cognizant of its exposure to the vagaries of movements in foreign exchange, in particular US Dollars, and therefore remains vigilant in managing this risk on an ongoing basis. 24 MKH Berhad • Annual Report 2017 Management Discussion and Analysis Report PT MKH recorded high fresh fruit bunch production of 407,000 MT for FY2017 PT. MKH was among one of the first oil palm plantation companies in Indonesia to receive the ISPO certification in April 2017