Annual Report 2016
29
Group Managing Director’s Report
(Cont’d.)
OUTLOOK AND PROSPECTS
Globally, the forecast for the 2016 economy has been downgraded by the World Bank
and is sluggish with performances of emerging economies weakening. Earlier this
year, the Malaysia Government trimmed the country’s expected GDP growth rate down
to 4%-4.5% in 2016, and consumption is expected to moderate to a much slower pace.
With the recent outcome of the United Kingdom referendum to exit the European
Union or ‘Brexit’, the cloudy outlook appears more grey.
For the coming period, the Ringgit which depreciated 18% in 2015 looks to continue
its fluctuating path and is expected to be volatile. Meanwhile, prices of commodities
such as palm oil, soybean, corn and brent crude are still on a choppy rebounding
trend.
In FY2016, the weak Ringgit benefited QL in terms of repatriated revenue but took a
heavy toll on the commodities that we imported which was fortunately lessened by
lower commodity grain prices. As Ringgit remains weak against the greenback and if
commodity grain prices were to increase, the cost of imports may surge.
Rising price of commodities grain means feed cost will increase accordingly,
translating to higher farming cost. The livestock industry as a whole is bracing for the
impact of the cost of farming which is expected to rise substantially in the second half
of FY2017. The silver lining for this industry is that the prices of eggs are expected to
normalise and remain stable after a year of price consolidation in the financial year
under review.
The hot weather effect will continue to affect FFB production. QL anticipates that this
challenge will be cushioned by the price of CPO which is expected to stabilise
upwards.
With domestic consumer sentiments that remain bearish and a lethargic economic
growth for Malaysia and other economies, FY2017 will continue to be a challenging
year, amid continuing uncertainties of ‘Brexit’ effect.
Despite all these, we remain confident of returning another year of profitable
performance and in view of the developments, we are overall still cautiously optimistic
to deliver a respectable growth.
DR. CHIA SONG KUN
Group Managing Director
