IOI Corp earnings soar

PETALING JAYA: Integrated palm oil producer IOI Corp Bhd has recorded a 30% increase in its net profit to RM46.6mil for the fourth quarter ended June 30, 2019.

This was despite revenue for the period slipping 3.5% year-on-year to RM1.74bil.

For the full year, however, the group’s net profit plunged 79.3% to RM631.7mil, while revenue for the period also came in lower at RM7.39bil from RM7.42bil previously.

In a filing with Bursa Malaysia, the group said the lower profit for the full-year period was mainly due to a lower operating profit and total net foreign currency translation losses on its foreign currency-denominated borrowings and deposits.

It also cited the absence of material disposal gains in the fourth quarter, as opposed to the disposal gain of RM1.68bil arising from the divestment of its 70% equity interest in Loders Croklaan Group BV in the same period a year ago.

Excluding the total net foreign currency translation loss of RM102.1mil, as well as fair-value gains on derivative financial instruments from the resource-based manufacturing segment of RM28.9mil, IOI Corp said the underlying pre-tax profit for the period was 24% lower than a year ago.

This, it said, was attributed to a lower contribution from the plantation segment, although mitigated by a higher contribution from the resource-based manufacturing segment.

Profit from the group’s plantation segment came in at RM483.9mil, representing a decline of 52%, on the back of lower crude palm oil (CPO) and palm kernel (PK) prices realised, as well as a lower fresh fruit bunch (FFB) production.

Average CPO and PK prices realised for the full-year period were RM2, 025 per tonne and RM1, 390 per tonne, respectively.

As for the group’s resource-based manufacturing segment, profit for the year of RM553.4mil was higher than the profit of RM384.0mil recorded during the same period last year.

The improved profit was mainly due to a higher contribution from all sub-segments and a higher share of associate results from Loders.

Moving forward, the group expects its operating performance in the financial year 2020 to be satisfactory. This is premised on its anticipation that palm oil prices will recover gradually in the next financial year, as palm oil stocks decline from a record-high level in December 2018.

“The palm oil price will be supported by increased exports to major consuming countries such as India and China, higher demand from the biodiesel industry in Malaysia and Indonesia, as well as moderate production increase due to the dry weather, ” it said.

It added that it expected total FFB production during the year to improve slightly, with the higher production from the young Indonesian plantings offsetting the temporary loss from the higher replanting rate in its Sabah plantations.

“Coupled with the anticipated improvement in the CPO price, we expect the plantation segment’s performance to improve in the coming financial year, ” it said.

Source: TheStar