KL Kepong 3Q earnings jump 13% on higher palm oil price, FFB output

by **Cals** Thu 21 Aug 2014, 12:51

Business & Markets 2014

Written by Jeffrey Tan of theedgemalaysia.com

Thursday, 21 August 2014 09:55

KUALA LUMPUR: Kuala Lumpur Kepong Bhd’s (KLK) net profit jumped 13% to RM213.66 million for the third quarter ended June 30, 2014 (3QFY14) from RM189.16 million a year ago, on higher palm oil price and fresh fruit bunch (FFB) production.
Revenue rose 34.4% to RM2.92 billion from RM2.18 billion in 3QFY13.
In a filing with Bursa Malaysia yesterday, the group said its plantation segment’s profit improved twofold to RM229.8 million from RM114.8 million in 3QFY13. KLK said this was due to favourable selling prices of palm products, higher FFB production and a reduction in production cost.
As for the manufacturing sector, however, profit slipped to RM66.5 million compared with RM69.1 million a year ago. Its oleochemical division also posted marginally lower profit of RM65.9 million for 3QFY14 versus RM67.9 million earlier.
KLK also said it had accounted for an impairment of RM19.8 million on the prepaid lease payment in Papua New Guinea.
For the nine-month period to June 30 (9MFY14), net profit rose 24% to RM820.95 million from RM659.74 million a year ago, while revenue also grew 24% to RM8.35 billion from RM6.73 billion.
KLK said the higher net profit was on account of better CPO selling price and sharply higher palm kernel selling price.
It added that FFB production increased slightly while CPO production cost fell.
“Overall, the group’s profit for the current financial year will be better than that of the last financial year,” said KLK.
“With tougher measures being imposed on opening of letters of credit in China, the demand for palm oil therein will be affected. However, current palm oil prices, trading [at] around RM2,100 per tonne, should find support on account of biodiesel demand.”
Meanwhile, Batu Kawan Holdings Bhd, the holding company of KLK, reported a flat net profit growth to RM110.53 million for 3QFY14 from RM110.51 million a year ago.
Revenue surged 33.8% year-on-year to RM3.02 billion from RM2.26 billion.
For 9MFY14, Batu Kawan recorded a net profit of RM430.7 million versus RM358.3 million in the previous corresponding period, while revenue was higher at RM8.63 billion from RM6.96 billion a year ago.

This article first appeared in The Edge Financial Daily, on August 21, 2014.