KUALA LUMPUR: Companies involved in downstream timber activities are encouraged to explore the opportunities of exporting to emerging markets like India, the Gulf countries and Pakistan while banks have to be more supportive.
Malaysian Timber Council (MTC) chief executive officer Cheah Kam Huan said although the activities worldwide had slowed down due to the recession, certain countries were showing signs of growth and the demand for wooden products had improved. “We are making inroads into countries like Dubai, United Arab Emirates and Oman as there are lots of construction activities going on,” he told StarBizWeek recently. “There are some companies exploring opportunities in these countries currently and MTC will continue to promote downstream as well as upstream products to the emerging markets through the participation of fairs and trade shows.”
However, he pointed out that the United States and European markets would remain the main export markets for Malaysia’s downstream timber products.
Cheah also urged companies to invest in new technology to produce better quality and new products.
According to MTC, Malaysia’s export of timber products in 2008 amounted to RM22.7bil, an increase of 0.1% over the previous year. Downstream activities contributed about 40% of total exports. Downstream products include mouldings, wooden frames, builders’ carpentry and joinery (BCJ) and wooden furniture. BCJ comprises flooring, windows and doors products.
The timber sector contributes about 4.5% to the nation’s gross domestic product annually. The peninsula produces more than 5 million cu m of logs annually, including rubber wood.
Cheah said downstream activities had made a lot of progress over the last 10 years but had been recently affected by the economic crisis globally. He said the industry would not view the current environment as encouraging as improvement in demand for timber products had been very slow, especially in the West. “Manufacturers affected by the export market will have to take a cautious approach to tide over this period,” he said, adding that the export figures for downstream activities this year would hardly match last year’s level.
He said the timber industry’s performance very much depended on the economic situation in the United States and Europe. “The picking up of the property and construction sectors in the West will boost the demand for timber products directly.” He pointed out that the Government’s target was to increase the contribution of downstream activities to 60% of total timber products export from 40% currently.
Financial support was key to the success of both downstream and upstream activities, Cheah said. “Banks have been reluctant to lend to all sectors, including the timber industry, since end of last year, thus the industry is facing problems in expansion,” he added.
Showing posts with label Stocks~WTK. Show all posts
Showing posts with label Stocks~WTK. Show all posts
Saturday, September 12, 2009
Sunday, September 6, 2009
WTK ~ Current Year Prospect : 09 Q2
Current Year Prospects
Quarter 2, 2009
Timber
Japan, a major buyer for tropical hardwood timber products, returned to growth in the second quarter 2009, out of its longest recession since World War II. Growth in the world’s No. 2 economy is likely to continue in the coming quarters as companies restock inventories to meet a pick-up in demand at home and abroad. Notwithstanding this, going forward to the second half of 2009, the timber industry is projected to show improvement in both its demand and its selling prices. Selling price for round logs is expected to be firm given the dry weather condition in Sarawak. The low water level of rivers will mean a tighter supply of logs from Sarawak. Total plywood imported by Japan continued to drop during 2nd quarter 2009. This resulted in a significantly low inventory level in Japan and signs of tightening in the market are visible. Coupled with the expected improvement in housing starts, orders for plywood products are expected to increase during the second half of this year.
Given this, the Group remains cautiously optimistic of the industry and barring unforeseen circumstances, expects the Group’s results to improve second half of 2009. The group will also continue to monitor its various cost-cutting measures and its controls to conserve cash and focus on higher margin products.
Non-Timber Manufacturing & Trading
The current global economic downturn has affected the non-timber manufacturing and trading division, particularly with depressed demand in the primary export markets. With no sign of recovery in the near future, the division foresees the current weak market sentiment to continue until the end of 2009.
As the business outlook of the division remains challenging, the division shall endeavor to maintain its competitive advantage by streamlining its supply chain, focusing on its core products and strengthening branding to deliver differentiation to customers.
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Quarter 2, 2009
Timber
Japan, a major buyer for tropical hardwood timber products, returned to growth in the second quarter 2009, out of its longest recession since World War II. Growth in the world’s No. 2 economy is likely to continue in the coming quarters as companies restock inventories to meet a pick-up in demand at home and abroad. Notwithstanding this, going forward to the second half of 2009, the timber industry is projected to show improvement in both its demand and its selling prices. Selling price for round logs is expected to be firm given the dry weather condition in Sarawak. The low water level of rivers will mean a tighter supply of logs from Sarawak. Total plywood imported by Japan continued to drop during 2nd quarter 2009. This resulted in a significantly low inventory level in Japan and signs of tightening in the market are visible. Coupled with the expected improvement in housing starts, orders for plywood products are expected to increase during the second half of this year.
Given this, the Group remains cautiously optimistic of the industry and barring unforeseen circumstances, expects the Group’s results to improve second half of 2009. The group will also continue to monitor its various cost-cutting measures and its controls to conserve cash and focus on higher margin products.
Non-Timber Manufacturing & Trading
The current global economic downturn has affected the non-timber manufacturing and trading division, particularly with depressed demand in the primary export markets. With no sign of recovery in the near future, the division foresees the current weak market sentiment to continue until the end of 2009.
As the business outlook of the division remains challenging, the division shall endeavor to maintain its competitive advantage by streamlining its supply chain, focusing on its core products and strengthening branding to deliver differentiation to customers.
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WTK ~ Review of result : 09 Q2
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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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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