WTK hopeful amid higher plywood prices

KUALA LUMPUR: WTK Holdings Bhd is hopeful of raking in higher profit this year as it benefits from buoyant plywood prices.

In the first quarter ended March 2011, WTK swung back to profitability from RM1.95 million loss recorded in the corresponding period a year ago. It netted a RM12.66 million profit on the back of RM156.77 million revenue.

"Plywood prices have started to climb. It is now averaging at around RM600 per cubic metre, much higher than RM450 per cubic metre a year ago," said chairman Datuk Wong Kie Yik.

At the start of the year, WTK has established 5,500ha of forest plantation and planted 7,000ha with oil palms. "This year, we've set aside RM20 million to expand our forest plantation by another 2,000ha. As for our oil palm estates, we're planting up another 3,000ha," he told reporters after the company's shareholders meeting here yesterday.

"WTK is still relatively young in oil palm planting. We expect the palm oil business to only contribute significantly from 2014 onwards," he added.

Japan, which imports 60 per cent of its tropical hardwood plywood requirements from Malaysia, remains the biggest market for WTK's plywood. "We export 90 per cent of our plywood to Japan and the remainder goes to Taiwan," he said.

Asked if the current plywood price spike is brought by increased orders from Japan's reconstruction efforts following the triple disaster of an earthquake, tsunami and prolonged nuclear crisis, Wong said: "Yes, the orders are starting to trickle in."

Temporary homes are now being built for more than 100,000 families in Japan. The earthquake and tsunami have destroyed and damaged about 220,000 homes there. Last month, the Japanese government approved a 4.0-trillion yen (RM151 billion) first extra budget to meet immediate disaster relief costs. Money is being channelled to the clean-up and the construction of more than 100,000 temporary houses.

Japan's Economics Minister Kaoru Yosano reportedly said his government may need to spend between 10 trillion and 15 trillion yen (RM378 billion and RM566 billion) for reconstruction from the devastating earthquake that hit the country's northeast in March.

"We believe these development would further strengthen Japan's housing starts again and the demand for our timber products," said Wong, adding that Japan's rebuilding efforts may lasts for five years. Apart from plywood sales, WTK also exports logs to India, China, Japan and Southeast Asian countries.

On challenges that lie ahead of WTK, he said timber production cost has gone up since the beginning of 2011. "It is in line with the world's oil price spike. Royalty rates for logs, too, have gone up," he added.

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