Review of Results
For the quarter under review, the Group’s turnover was RM133.1 million as compared to RM226.1 million in the 2Q2008, representing a decrease of RM93.0 million (41.1%). The Group recorded pre-tax loss of RM3.4 million compared to pre-tax profit of RM23.5 million registered in 2Q2008. This is mainly attributed to the timber division.
Quarter 2, 2009
Timber
For the current quarter, the Group’s timber division registered a turnover of RM104.3 million, representing decrease of 45.4% or RM86.7 million as compared with RM191.0 million in the 2Q2008. This resulted in a pre-tax loss of RM3.7 million, a decrease of 116.4% compared to 2Q2008 profit of RM22.5 million. The drop is due to the continued economic slow-down and financial crisis world-wide.
On a year-to-date (YTD) basis, the timber division registered a turnover of RM190.5 million, representing decrease of 40.8%, as compared to the previous corresponding period of RM321.7 million. This is attributed to the decrease in logs and plywood sales volume of 24.2% and 47.7% respectively. Consequently, the division recorded a net loss of RM15.6 million, a substantial decrease of 160.2% or RM41.5 million when compared to RM25.9 million pre-tax profit registered in the previous corresponding period.
On a year-on-year (YOY) basis, average round log prices dropped by approximately 9.8% compared to prices registered in 2Q2008, whilst sales volume dropped by 36.8% compared to 2Q2008. On a YTD basis, average round log prices also dropped compared to the corresponding period, that is by approximately 9.1%. The Group’s key export markets for round logs is India (66%), Vietnam (10%), Japan (5%), China (5%) and the remaining 14% exported to Asian countries including Taiwan, South Korea and Hong Kong.
As for the Group’s plywood division, sales volume for the quarter in review decreased 42.1% as compared with 2Q2008, whilst, average selling prices decreased by 18.5% as compared to 2Q2008. On a YTD basis, average plywood prices were lower by 8.6% whilst volume decreased 47.7%. The Group’s key plywood markets for the quarter in review were Japan (80%) and Taiwan (20%).
Non-Timber Manufacturing & Trading
The non-timber manufacturing and trading division recorded a turnover of RM28.1 million for the quarter under review when compared to RM34.1 million in 2Q2008, a decrease in turnover of RM6.0 million (17.6%) due to soft market conditions, particularly in the primary export markets.
It recorded pre-tax profit of RM0.4 million when compared to pre-tax profit of RM0.5 million registered in 2Q2008. The lower pre-tax profit is mainly attributed to stiff competition affecting the demand of the Group's foil division.
On a year-to date basis (YTD), the division registered a turnover of RM53.1 million as compared to RM68.0 million in the previous corresponding period. The division’s YTD pre-tax profit also dropped by RM1.0 million to RM0.3 million as compared to the corresponding period last year (RM1.3 million). The decreases in both YTD turnover and pre-tax profit were mainly due to soft export market conditions explained above.
Material Changes for the Quarter Reported on as Compared with the Preceding Quarter
Quarter 2, 2009
Timber
The Group’s timber division registered a turnover of RM104.3 million, an increase of RM18.1 million as compared to 1Q2009. Its pre-tax loss decreased from RM11.9 million to RM3.7 million, an improvement of RM8.2 million (68.9%). This is mainly due to the slight improvement in the log division.
Non-Timber Manufacturing & Trading
The non-timber manufacturing and trading division recorded a turnover of RM28.1 million, an increase of RM3.1 million as compared to 1Q2009. It recovered from pre-tax loss of RM0.1 million to pre-tax profit of RM0.4 million, an improvement of RM0.5 million. This is mainly attributed to improvement in the division's product mix.
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