Plantation company Golden Hope Plantations Bhd expects to make an annual average pretax profit of RM550 million for the five years to 2008 following a recent rationalisation exercise, local media reported today.

The forecast is a 152.5 percent jump from the pretax profit of RM360.6 million Golden Hope posted for its financial year ended June 2003 on the back of RM2.8 billion revenues, the Business Times said.

The projection was based on the current and future trend of crude palm oil (CPO) prices which are expected to hover between RM1,100 and RM1,200 per tonne for the next two years, said group chief executive Abdul Wahab Maskan.

CPO is currently trading at around RM1,400 per tonne.

"CPO prices are volatile and can dip below RM1,000 a tonne but such a drop takes a long time and does not happen overnight. I do not see it happening in the near term," Abdul Wahab said.

"For the medium- and long-term, CPO prices are going to be friendly and may go up to between RM1,300 and RM1,400 depending on the forces of nature as well as global supply and demand," he said.

Share swap deal

Should CPO prices dip below RM1,000, the company would still be profitable as its cost of producing a tonne of palm oil is RM500, he said.

Golden Hope is undergoing a RM3.6 billion share swap arrangement with sister company Island and Peninsular Bhd (I and P) that will create two listed powerhouses -- Golden Hope in plantations and I and P in property development, the newspaper said.

Abdul Wahab said the rationalisation exercise, slated for completion by April or May next year, would enable Golden Hope to position itself as the second largest plantation company in Malaysia after state-owned Federal Land Development Authority (Felda), which is to be listed by year end.

Felda, which will be the world's largest listed oil palm estate, directly owns 354,554 hectares of plantation land, while settlers have another 447,246 hectares of plantation land.

Golden Hope's planted oil palm area would increase from 91,162 hectares to 129,474 hectares upon completion of the reorganisation, it said.

Malaysia is the world's largest palm oil producer, accounting for about half of global output. - AFP