At the beginning of the Asian financial crisis, some of the more alert equity analysts pointed to one sector likely to weather the storm - plantations. With costs mainly in local currency and revenues almost entirely in US dollars, plantation companies should have been well positioned to reap benefits where many others suffered. Provided, that is, they had not burdened themselves with foreign-currency debt, and diversified into dubious non-core businesses - as several had.
Hap Seng Consolidated Berhad is an example of a successful plantation company that is rising in adversity. The Malaysian firm is not only a substantial palm-oil producer, it is a growing presence in Asia's food and beverage industry. At a time when earnings for companies listed in Kuala Lumpur are slumping, Hap Seng is producing record profits. Sales for the first half of 1998 jumped to M$102 million ($27 million) from an already impressive M$70 million last year. Pre-tax profits rose from M$47 million to M$60 million.
"The mix of our business is anti-cyclical and anti-currency cyclical," explains John Madsen, the company's CEO. "All oil-palm products are exported and traded in US dollars.