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Chairman Statement

In 2017, the palm oil industry experienced a strong recovery from the El Nino weather phenomenon which had depressed yields throughout the Asian region. Thailand’s production of Crude Palm Oil increased from 1.8 million tonnes in 2016 to a new record of 2.6 million tonnes in 2017.

Also in 2017, we witnessed the continuing development of our Company’s business strategy to become a leader in four key areas of this expanding industry.

Our first key objective is to be the leading supplier of the seeds and seedlings required for this continuing expansion. In 2017 Univanich launched our new high-yielding clonal seeds, a first in Thailand. This is the successful outcome from long-term research and investment into high-tech tissue culture and oil palm breeding.

We have also expanded our oil palm nurseries at strategic locations across the main oil palm growing regions of Southern Thailand. During the past three years alone, these nurseries have supplied local smallholders with sufficient high-yielding and drought tolerant seedlings to convert 200,000 rai (32,000 hectares) to oil palms.

Our second key objective is to be the leading processor of this increasing volume of fruit. In 2017 Univanich purchased an existing palm oil crushing mill in Phang Nga province and also completed the construction of our fifth crushing mill on a green-field site in Phatthalung province. Our capital expenditure in 2017 was Baht 978 million, all funded internally. Univanich processing capacity increased from 155 to 245 tonnes fruit per hour. This additional capacity is now ready to handle increasing fruit volumes from the expanding planted area.

Two significant Univanich milestones achieved in 2017 were the processing of more than one million tonnes of oil palm fruit and the production of more than 200,000 tonnes of crude palm oils.

Our third key objective is to become a leading exporter of Thailand’s increasing palm oil surplus. To achieve this goal we have recently constructed a tank farm or port bulking installation at the Krabi deep-water port of Laemphong. Oil from Univanich factories and from third party partners can now be collected at the port ready for export to India, Middle-East and Europe. During the next five years as Thailand’s production increases, we expect this to become an important part of our business and an essential support for the domestic palm oil industry.

Our fourth key objective is to expand this successful model of sustainable rural development into other countries around the Asia region. It is pleasing to note that in 2017 our Philippine crushing mill in Mindanao processed 84,000 tonnes of oil palm fruit in what was only its third full year of operation. We hope to build on the success of this joint venture in Mindanao by encouraging more small farmers to convert their land to more productive oil palms.

In our Annual Report last year I explained the many legal issues affecting land disputes over some of our plantation concession areas in Thailand. I will not repeat this here except to say that our cases in the Administrative Court are proceeding with some success and some set-backs leading to appeal. The company remains convinced of the justice of our legal petitions and we have confidence that the Court will reach just final verdict.

I would like to take this opportunity to congratulate our Board on the growing success of their investment strategies. Also to congratulate our management team for their successful implementation of those strategies and for the very satisfactory results achieved in 2017.

Finally, I would like to thank our many stakeholders for their loyal support and for their continuing interest in the development of our company and the communities in which we operate.


Apirag Vanich
Chairman

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