Southern Acids Q2 net profit surges 19-fold

Southern Acids (M) Bhd's net profit for the second quarter ended October 2010 jumped 19-fold to RM7.92 million from RM408,000 a year ago.

Chairman Tan Sri Low Boon Eng said its outlook for the rest of the financial year should be bright. This is given that palm oil prices are likely to remain buoyant at over RM3,000 a tonne as global demand for vegetable oils exceeds supply.

He attributed the group's solid interim results to more sales of oil palm fresh fruit bunches at higher prices and improved performance at its Sri Kota Specialist Medical Centre in Klang.

Southern Acids, via PT Mustika Agro Sari and PT Wanasari Nusantara, has 7,870ha of oil palm plantations in Riau, Indonesia. Chief executive Leong Kian Ming said: "For this quarter, we milled 35,476 tonnes of fresh fruit bunches, 18 per cent more than 30,174 tonnes a year ago.

"Also, our average crude palm oil selling price was RM2,518 a tonne, much higher than RM2,136 a year ealier."

Leong and Low were speaking at a briefing on the company's quarterly results in Klang yesterday. Palm oil prices had been trending upwards in the last five months. Yesterday, palm oil futures on the Malaysian Derivatives Market climbed RM35 to close at RM3,633 a tonne.

Southern Acids operates a 100,000-tonne-a-year oleochemicals plant in Kapar, Klang, via Pofachem (M) Sdn Bhd. Low said the company wanted to upgrade and double its capacity. "The oleochemicals market is doing good. We want to expand," he added.

Another contributing factor for Southern Acids' second quarter results is the absence of foreign exchange losses, which it had incurred previously. "We do not enter into target redemption forward contracts anymore. That was in the past. We now just do the normal hedging," Low said.

Southern Acids' 232-bed Sri Kota Specialist Medical Centre in Klang made a RM1.02 million net profit in the second quarter. This was a turnaround from the RM1.17 million loss a year ago. "We've managed to turn the hospital around and it is now operating at 60 per cent occupancy. We want to tap into medical tourism to improve the rate to 90 per cent," Low said.

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