Bouyant palm oil & rubber prices benefits KLK

KUALA LUMPUR: Kuala Lumpur Kepong Bhd (KLK) expects good results on prospects of continued buoyant commodity prices, said executive director Datuk Lee Hau Hian.

His optimism is underpinned by the current global demand for vegetable oils and natural rubber surpassing supply. 

In the first 15 weeks of this year, crude palm oil prices have been averaging at around RM3,400 per tonne. Natural rubber latex is now trading at a all-time price range of above RM10 per kg.

"We should be able to perform better this year, if palm oil and rubber prices remain buoyant," he told Business Times on the sidelines of Invest Malaysia 2011 in Kuala Lumpur yesterday. He then said the group's oil palm fresh fruit bunch output is expected to increase by up to 10 per cent this year to 3.5 million tonnes.

Asked on the group's oleochemical business, he replied the plants in Malaysia had recently added 250,000 tonnes in annual capacity. "The new facilities should start commercial operation towards the end of the year," he said.

Moving on to property development, Lee said the group plans to redevelop 405ha near Sg Buloh into a new township, called Bandar Seri Coalfields, with a gross development value of RM3.7 billion. The shophouses and residences will be built over 10 years.

KLK's retailing arm, Crabtree & Evelyn, which had undergone restructuring two years ago, is growing from strength to strength.

Crabtree & Evelyn gross profits improved by 13 per cent to US$17 million (RM51.51 million) in the first quarter ended December 2010, thanks to strong year-end sales. Lee noted that the US market, where some of the earliest stores are established, contributed to 21 per cent of Crabtree & Evelyn's gross profits, an improvement from a year ago.

The best performing stores are in Asia Pacific and Australia as they contributed to almost half of the Crabtree & Evelyn's profits. "There will be more product launches this year. We also expect store growth prospects to be in Asia," he added.

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