KUALA LUMPUR: MSM Malaysia Holdings Bhd expects demand for sugar to pick up gradually by five to 10 per cent in the second half of the year (2H2021).
Group chief executive officer Syed Feizal Syed Mohammad said demand had picked up by about five to 10 per cent in 1H2021 with the opening of more industries.
“Previously, the Malaysian market consumed 1.5 million tonnes of sugar but due to the pandemic, consumption dropped from 1.2 million to 1.3 million tonnes.
“I think we will get better next year and we hope Malaysia will achieve the previous consumption rate of 1.5 million next year,“ he said during a virtual press conference in conjunction with the sugar refiner’s extraordinary general meeting (EGM) today.
At the EGM, shareholders approved the company’s proposed disposal of its wholly-owned subsidiary MSM Perlis Sdn Bhd to FGV Integrated Farming Holdings Sdn Bhd for an initial cash consideration of RM175 million, subject to adjustment for net working capital and net debt at completion.
On raw sugar, Syed Feizal said the price has been on the high side due to weather-related factors in major producing countries, with the New York 11 Index currently hovering between 19 cent and 19.5 cent.
“Brazil previously faced drought and frost damage recently.
“Some volume will be affected certainly so there will be less sugar in the market,“ he said.
Nevertheless, Syed Feizal expects Brazil to get back to its full volume in the next 12 to 18 months.
In addition, he said Thailand also faced drought two years ago and heavy rains.
However, he said Thailand is recovering, adding one to two million tonnes every year toward its normal export of 14 million to 15 million tonnes.
“We will see continued bullishness in the raw sugar price, but toward the end of 2022, we may see prices getting back to at least their normal level,“ he said.
Asked about the government's plan to increase the types of sweet drinks that will be taxed under the sugar tax, he said the impact on MSM will not be severe.
Syed Feizal said the sugar tax may be imposed onto food and beverages fast-moving consumer goods, whereas less than 12 per cent of MSM’s customer base is involved in this segment.
He said with the current positive development, MSM is on track to achieve a turnaround this year.
MSM Sugar Refinery (Johor) Sdn Bhd is also expected to return to the black in 2022, provided its capacity reaches 50 per cent by the end of this year, he added.
As for the export outlook for MSM, Syed Feizal said the group has secured orders of 306,000 tonnes, delivered 144,000 tonnes to its customers and the balance is expected to be delivered by the end of the year.
Next year, MSM expects exports to be slightly above 450,000 tonnes.
“MSM is also continuously assessing non-core assets to be divested.
“The company owns small parcels of industrial lands and if there were no strategic need for them, we will put it (for sale) when the market window is good,“ he said. - Bernama