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INTEGRATED
ANNUAL REPORT
2019

KULIM (MALAYSIA) BERHAD
INTEGRATED ANNUAL REPORT 2019

This Integrated Annual Report covers the activities of Kulim (Malaysia) Berhad for the
Financial Year Ended 31 December 2019 (“FYE 2019”) up to 16 March 2020,
being the last practicable date before the printing of this report.
The Integrated Annual Report aims to provide concise, relevant and reliable information.
A supplementary section of the Integrated Annual Report which expands on the
Group’s issues and individual stakeholder requirements is available on the Group’s website

"UNLEASHING POTENTIAL STRATEGIC INITIATIVES"




PERFORMANCE FOR THE YEAR 2019


12.95%


REVENUE

RM 1.21 BILLION

FYE 2018 RM1.39 Billion

321.16%


PBT

RM127.85 MILLION

FYE 2018 RM57.81 Million

DIVIDEND TO SHAREHOLDERS


RM200 MILLION


GROSS GEARING

Ratio

0.64 Times

NET GEARING

Ratio

0.69 Times

AVERAGE SELLING PRICE

6.23%

CPO

RM2,182 pmt

FYE 2018 RM2,327 pmt

28.07%

PK

RM1,289 pmt

FYE 2018 RM1,792 pmt

MESSAGE FROM THE CHAIRMAN

"Dear Stakeholders"

I am pleased to present to you, our sixth Integrated Annual Report and Audited Financial Statements of Kulim (Malaysia) Berhad for the Financial Year Ended 31 December 2019 (“FYE 2019”)

the year 2019 can best be described as another challenging year for Kulim on the back of weak Crude palm Oil (“CpO”) and palm Kernel (“pK”) prices that have impacted the group’s profitability.

nevertheless, Kulim’s fundamentals remain strong as we have undertaken various group-wide initiatives to optimise the potential of our business segments. Our Oil palm plantation business continued to be the main contributor to the group, amidst a backdrop of volatile CpO and pK prices, european union (“eu”) restrictions on the use of palm oil, high inventory levels and lower CpO export volume to major countries. these were further compounded by labour shortages and increasing labour costs, which continued to affect our operations.

On the financial front, we managed and addressed the various challenges which came in the form of fluctuating exchange rates, higher gearing, as well as the cost of capital to ensure that Kulim’s balance sheet remained firm and healthy. business conditions.



DATUK ANUAR AHMAD

CHAIRMAN INDEPENDENT
NON-EXECUTIVE DIRECTOR




MANAGEMENT DISCUSSION & ANALYSIS

"Dear Shareholders"

The year 2019 could best be described as the year where Kulim proved its resilience in weathering the challenges that have continued to eclipse the palm oil industry.

THE OIL PALM PLANTATION SEGMENT REMAINED OUR MAIN CASH COW, CONTRIBUTING RM834.61 MILLION OR 69.04% OF THE GROUP’S REVENUE.

the year 2019 could best be described as the year where Kulim proved its resilience in weathering the challenges that have continued to eclipse the palm oil industry.

Overall, Malaysia’s palm oil industry saw CpO production increased marginally by 1.8% to 19.86 Million tonnes recorded in 2018. the increase was due to higher FFb processed, up by 0.5% arising from higher FFb yield which increased by 0.2%. better Oer performance, which was recorded higher by 1.3% to 20.21% as compared to 19.95% achieved in 2018 also contributed to higher CpO production.

in 2019, the prices of all oil palm products were traded lower. CpO price traded lower by 6.9% to RM2,079.00 per tonne compared to RM2,232.50 per tonne in 2018.





Left:

ZULKIFLY ZAKARIAH

EXECUTIVE DIRECTOR (ED)

Right:

SHAHROM MOHD SAAD

HEAD OF FINANCE DIVISION (HOF)


SEGMENT REVIEW

PLANTATION

The year 2019 was marked with challenges for Kulim’s Plantation Segment with lower palm oil market prices experienced by the Group. During the year under review, our Malaysian operations produced a total of 907,188 tonnes of Fresh Fruit Bunches (“FFB”), a 1.38% decrease from 919,844 tonnes in 2018.

OIL & GAS

FYE 2019 was a challenging for Kulim’s O&G Division, as it posted a LBT of RM92.51 million compared to PBT of RM73.91 million in FYE 2018. LBT was recorded mainly due to impairment and share of loss of Indonesia O&G joint venture investments amounted RM44.05 million.

INTRAPRENEUR VENTURES

A commitment to real Entrapreneur capabilities and management talent among employees lead us to establish Kulim’s Intrapreneur Venture (“IV”) Division. The Division is entrusted to create an ecosystem that encourages value-adding initiatives across a diverse range of businesses