Ta Ann expects higher demand for plywood
The company reported a recovery in demand since late March amid the low plywood inventory levels in Japan.
In the January to March quarter (1Q25), the group 's plywood exports plunged by 48% from a year ago.
The recovery in plywood demand from Japan has resulted in greater operational efficiency and a leaner cost structure, enabling the group to maintain competitive pricing, said Ta Ann after releasing its 1Q25 financial results last week.
Group managing director Datuk Wong Kuo Hea said in the company's annual report for last year that with Japan's infrastructure rebuilding efforts gaining momentum, the company anticipates a resurgence in plywood demand.
He said the group's plywood business had experienced a significant setback since 2023, with demand from its primary export market, Japan, remaining sluggish due to ongoing economic headwinds.
These include the lingering effects of the Covid-19 pandemic, negative population growth and an earthquake early last year.
The weak market demand impacted Ta Ann group's Malaysian plywood production which shrank by 19% to 49,891 cubic metres (cu m) last year from 61,642cu m in 2023.
Year-on-year, the group's plywood sales volume contracted by 24% to 52,138cu m from 68,784 cu m.
In both 2023 and 2024, the group exported 99% of its plywood to Japan and the remaining 1% to Australia.
In responding to the weak demand, Wong said the group had adjusted jits production to align with market demand and implemented various strategies to adapt to the evolving situation.
These measures include enhancing productivity while ensuring product quality and maintaining regular communication with Japanese buyers to swiftly address market changes.
'Our dedication to sustainable forest management continues to provide a competitive edge for our key product – coated concrete plywood – which is fully Programme for Endorsement of Forest Certification-certified,' he said.
Besides Malaysia, the group's Tasmanian operation in Australia also manufactures plywood products for the local market there.
'The availability of skilled workers remains the primary challenge for our Tasmanian operations. Despite this, management is focused on enhancing workforce productivity and adopting lean-manufacturing practices to ensure operational sustainability.
'Since consolidating our resources at the Smithton Mill in northern Tasmania in 2021, we have prioritised optimsing resources utilisation and implementing prudent cost management strategies to improve efficiency.
'By maintaining stringent cost control, we have successfully maintained our competitive position in the Australian market,' he added.
Ta Ann manages three active forest management units in Sarawak's Rejang region covering 346.021ha.
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