Eng - IOI Group

OUTLOOK AND PROSPECTSPrices of edible oils are generally expected to be softer in 2003/04 as supply continues to increase in the expansionphase of the cycle, recovering from weather induced shortages. However, earlier projections of sharp decline in priceshave been grossly over exaggerated as supply growth of the 2003 US soybean and European rapeseed crop as well aspalm oil, falls short of expectation. Demand has however been buoyant with growing consumption and the need toreplenish low inventory levels. Palm oil prices are also expected to be underpinned by new potential demand in 2004,arising from “non-trans fatty acid” formulation for certain applications and given the fact that it is currently about USD120 cheaper than soyoil. High cereal prices, which will likely induce some switch over from oilseeds to cereal plantingfor the new season, will also lend support to vegetable oil prices.We expect our price downside for FY 2004 to be within 5% of average price achieved for FY 2003. The Group’s CPOproduction is however expected to be higher by more than 20% over last year. Hence operating profit from plantationsegment will see further growth for the current year.Ha ('000)130ActualProjectionMt ('000)3,5001201103,0001002,50090802,000701,50060501,000FFB Production Mt ('000)405001999 2000 2001 2002 2003 2004 2005 2006 2007 2008Matured Ha ('000)55IOI Corporation BerhadAnnual Report 2003