Annual Report 2016
23
Group Managing Director’s Report
(Cont’d.)
FINANCIAL PERFORMANCE REVIEW
With a FY2016 top line that grew RM146.3 million (5.4%) to
RM2.853 billion, Profit Before Tax (PBT) came in at
RM249.5 million, an improvement of RM3.5 million (1.4%)
in comparison to the previous financial year. PBT margin
depressed slightly from 9.1% to 8.7% in the face of
challenging factors on the operations front, in particular
labour shortage, increasing wages, and CPO prices that fell
to a seven-year low.
Against these headwinds, QL saw the regional expansion
efforts paying off. For FY2016, revenue at each of our five
overseas operation bases in Indonesia and Vietnam
improved, translating to a collective increase of RM197.1
million to enhance regional operations revenue to RM478.0
million. This amount accounted for 16.8% of our group
revenue, up from the RM280.90 million or 10.4% regional
revenue contribution in FY2015.
Likewise, this increase also reflected a healthier adjusted
Earnings before Interest and Tax (EBIT) margin of 7.4% on
the regional operation bases in Indonesia and Vietnam. This
was a growth from the 6.9% margin posted in FY2015
despite the similar challenges in economic, climate and
efficiency faced by our operations in these regional
countries.
Of the three main revenue pillars, the Marine Products
Manufacturing (MPM) and Integrated Livestock Farming
(ILF) divisions recorded improved year-on-year revenue
results, while the performance of the Palm Oil Activities
(POA) division was undermined by the poor CPO prices that
tumbled to as low as RM1,947 per metric tonne in
September 2015.
Sales at the MPM division grew RM108.4 million or 14.8%
from RM732.5 million in FY2015 to RM840.9 million in
FY2016, courtesy of El-Nino which helped gave the
upstream activities of MPM a year of good catch and the
MPM operations in Sabah which grew substantially.
Profitability rose in tandem and MPM turned in a robust year,
increasing 31.1% in PBT from RM127.2 million in FY2015
to RM166.8 million this financial year. For the financial year
under review, MPM also experienced increase in export due
to favourable foreign exchange arising from weaker Ringgit.
The ILF division too saw revenue rising, albeit at a
moderated pace of 4.6% or RM74.9 million to increase to
RM1.705 billion in FY2016 on the back of higher volume of
feed raw material traded and higher contribution from the
Indonesia feed mill. The financial year under review was
also one where this division had to fend off blows of lower
egg prices due to market consolidation, higher farming
costs, low farm efficiency and hence, recorded a full year
PBT of RM71.0 million, a drop of 31.7% when compared
year on year.
Cumulatively, the POA division did a PBT of RM11.6 million
on the back of RM308.0 million revenue. The decrease of
10.7% in revenue and 21.4% in PBT compared to FY2015
POA division revenue and PBT respectively were due to
poor CPO prices, low fresh fruit bunch (FFB) yield and lower
FFB processed by the Sabah palm oil unit as well as lower
contribution from associate company, Boilermech Holdings
Berhad.
REVIEW OF OPERATION
QL believes in focusing and building on our core businesses
where we are strongest. To continuously grow our business,
QL piled our foundation deep into our business pillars and
concurrently spread our operation wings into neighbouring
countries for ease of management and control. We are
constantly on the lookout to grow the business organically
as well as looking for acquisition opportunities to accelerate
growth.
Prudent financial management has given us a strong
balance sheet, allowing us the latitude to capitalise on any
opportunity as they arise. Among these opportunities are the
expansions of our business pillars. The capital expenditure
earmarked to increase our production capacity was
approximately RM300 million for FY2017.
Marine Products Manufacturing Activities (MPM)
Marine Products Manufacturing consists of upstream and
downstream activities including deep-sea fishing,
aquaculture farming, surimi and fishmeal production and
consumer foods.
For the financial year under review, annual production of
surimi, fishmeal, frozen fish and surimi-based products is
about 140,000 metric tonnes.
