United Fiber System Ltd said on Wednesday it is looking to divest its construction unit, making forestry and pulp-making its core business in the next few years to get higher margins.
Unifiber chief executive officer Jaka Prasetya told Reuters in an interview the pulp and forestry business gives up to 50-60 per cent profit margins, compared to the 10 per cent margin from its building unit, Poh Lian Construction (PLC).'In the medium-term, we'll probably find a new partner for the construction business to take the company to the next level,' Mr Prasetya said.
'That can mean spinning-off PLC and make it an independent company from Unifiber, or find a partner for PLC to venture overseas.'
In the meantime he said the firm is targeting up to $300 million (US$222 million) worth of new building projects this year, adding to a construction order book so far of $560 million.
'The other side of the business needs to pick up first,' Mr Prasetya said, adding that the firm's US$900 million pulp mill in Indonesia will only begin operations in 2010.
When asked about the impact of Unifiber's forestry business on the environment in Kalimantan on the island of Borneo, Mr Prasetya said the firm plants its own trees and does not clear existing forests.
'We have the logs we need and we don't need to touch the natural forest,' he said. 'So we are confident we won't have any issues,' he said.
Unifiber, with a market cap of US$419 million, owns 269,000 hectares of plantation - nearly four times Singapore's land area. At least 50 per cent of the pulp produced from the mill will be exported to China. The mill is a collaboration with a unit of state-owned China Metallurgical Group Corp. -- REUTERS
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