Plantation The following table summarises the performance of the division for the past three (3) years: Production for Estate FY2023 FY2022 FY2021 FFB – PT Maju Kalimantan Hadapan (MT) 388,000* 363,000* 419,000* FFB – PT Sawit Prima Sakti (MT) 22,000* 20,000* 22,000* FFB – GROUP (MT) 410,000* 383,000* 441,000* CPO production (MT) 89,000* 75,000* 89,000* Average CPO Price per MT RM3,348 RM3,847 RM2,945 Oil Extraction Rate (“OER”) 20.56% 18.51% 19.45% FFB Yield/hectare per year (Overall) 24 MT/ha 23 MT/ha 27 MT/ha Note: Figures exclude CPO purchased from outside parties for resale. *rounded up to nearest thousand For FY2023, the Plantation Division recorded a higher 7.0% growth in revenue, generating RM338.0 million compared to RM315.8 million in the previous FY2022. This growth can be attributed to an increased sales volume of CPO, driven by increase in FFB production and higher OER extraction rate. However, the division’s PBT experienced a decline of 51.1% to RM37.5 million (FY2022: RM76.6 million), primarily due to a lower average selling price of CPO of RM3,348/MT (FY2022: RM3,847/MT) and palm kernel of RM1,589/MT (FY2022: RM2,627/MT) and increase in average production cost mainly due to the following:- a. higher fertilizer costs and labour due to more fertilizer application during favourable weather during FY2023; b. increase in diesel costs; and c. increase in maintenance due to post-monsoon deepening and widening of drains for better discharge of water. Additionally, in FY2023, the Plantation Division incurred unrealised foreign exchange losses amounting to RM0.5 million as compared to the previous financial year FY2022 which recorded unrealised foreign exchange gains of RM4.7 million due to the weakening of the IDR against RM. Weather conditions play a crucial role in agricultural production. In the Kalimantan region of Indonesia, specifically in East Kalimantan where our oil palm plantation is located, there has been above-average rainfall during FY2021, FY2022 and first half of FY2023. This wet weather condition has resulted in lower crop production in FY2022. The weather has since normalized since March 2023 and our FFB production has increased. One of the measures implemented is the enhancement of our water management system. This ensures that adequate water supply is maintained for the oil palm trees, especially during periods of dry weather and release of excess water during the wet season. Additionally, our division has fine-tuned the Standard Operating Procedures (“SOP’s”) for harvesting. This allows us to optimize the timing and methods of harvesting, taking into account the specific weather conditions. By implementing these measures, we are able to minimize the effects of weather changes and maintain a sustainable level of production. Ripe fresh fruit bunches ready for harvesting MANAGEMENT DISCUSSION AND ANALYSIS REPORT 30 MKH BERHAD | ANNUAL REPORT 2023
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