Kulim Poised to Reinvent Itself Following FY2021 Stellar Results

July 31, 2022

JOHOR BAHRU, 31 July 2022: Kulim (Malaysia) Berhad (KULIM) reported its best
financial results in 2021 on record palm oil prices and improved operational efficiencies
from its ongoing transformation programme to become a leading agribusiness
company.

On the back of another challenging year arising from the prolonged COVID-19
pandemic and other external factors, KULIM turned in a Group profit before tax and
zakat of RM433.81 million for the financial year ending 31 December 2021, reversing
the previous period’s loss of RM316.45 million.

Revenue surged to RM1.65 billion (48.56 per cent) from RM1.11 billion the year before
despite lower sales volumes and yields from its plantations. This was achieved on
higher average selling prices for crude palm oil and palm kernel, which increased by
60.66 per cent and 77.64 per cent, respectively. Together with lower impairment and
provision expenses compared to a year earlier helped the Group to return to the black.

Under the circumstances, KULIM still managed to harvest 20.11 MT/ha from 22.93
MT/ha in 2020, this was higher than the industry average in Johor and Peninsular
Malaysia of 17.73 MT/ha and 16.24 MT/ha, respectively. In the same period, the Group
processed a total of 1,419,613 MT of fresh fruit bunches and produced 295,747 MT of
crude palm oil (CPO). The oil extraction rate decreased to 20.83 per cent, from 21.04
per cent, yet remained higher than the industry average of 19.68 per cent for
Peninsular Malaysia and 19.92 per cent for Malaysia as a whole.

“While we were operationally stretched by insufficient manpower, financially we stood
to benefit from sky-rocketing palm product prices. This translated into one of our best
financial results to date despite sub-optimum production and yield. We were naturally
pleased with our financial windfall, yet it was with even greater pleasure to see the
Group gradually shape up into the agriculture-focused, digitally enhanced, and
sustainably run organisation that we envisage at the end of our current transformation
journey,” said Mohd Faris Adli Shukery, Managing Director of KULIM.

He attributed the encouraging performance to the people of KULIM, its Board of
Directors and management who were able to steer the company through the
uncertainties and tough times.

In addition, the easing of restrictions on foreign labour entry enabled optimal
harvesting operations by the Group to capitalise on the high CPO prices.

MOVING FORWARD

KULIM is now set to expand its foray beyond oil palm plantation into an integrated
agribusiness player. It is looking to strengthen its position in the midstream and
downstream through partnerships and/or acquisitions of refineries and palm kernel
crushing plants. It is also expanding its livestock business of cattle and sheep while
exploring the possibility of partnering with a dairy producer.

The Group is also looking at building a robust and thriving agri-food portfolio to
contribute positively to the national food security agenda.

“Our ultimate objective is for KULIM to become a flagship company that can enhance
the state and national food security agenda. We will seek to establish a food
marketplace for smallholders, large private players and government-linked
companies,” said Mohd Faris.

A new business segment in KULIM, agro-farming includes intensive farming and
mono-crop to supply quality vegetables and fruit for the Malaysian market. In doing
so, it is adopting IR4.0 technology such as the Internet of Things (“IoT”) to further
enhance crop management while leveraging automation to reduce labour
requirements.

KULIM is also rolling out a structured Environmental, Social and Governance (ESG)
Framework which will align its sustainability initiatives with its vision, strategy and
goals.

As part of its commitment to ESG, KULIM is targeting to halve its carbon footprint by
2025 and has invested in expanding its renewable energy infrastructure in biogas
plants that have helped cut the Group’s methane emissions by 90 per cent. The
initiative is also in line with KULIM’s business direction to expand its potential in green
business which is expected to contribute positively to the Group’s earnings, as a new
income stream.

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