Plantation segment drags IOI earnings

Plantation segment drags IOI earnings
Business & Markets 2013
Written by Kamarul Anwar of theedgemalaysia.com
Thursday, 22 August 2013 09:47

KUALA LUMPUR: IOI Corp Bhd's net profit for its fourth quarter to June 30, 2013 (4QFY13) fell by over 33% from a year earlier to RM267.1 million as its PLANTATION [] segment took a beating from lower crude palm oil (CPO) and palm kernel (PK) prices during the period.

In a filing with Bursa Malaysia yesterday, the diversified conglomerate said: “The decrease is due mainly to lower profit from the plantation segment during 4QFY13 and a non-recurring gain arising from dilution of interest in an associate company of RM116.3 million recognised in 4QFY12.”

It said average CPO price realised for 4QFY13 was RM2,314 per tonne against RM3,244 a year ago.

Revenue declined 13.74% to RM2.94 billion from RM3.41 billion for the previous corresponding period. The downstream business posted a profit of RM129.3 million compared with RM40.6 million a year ago, due to increase in sales volume from all the subsegments as well as higher margin from the refinery and oleochemicals subsegments.

The property development segment registered a 63% gain in operating profit to RM203.8 million on higher development revenue and increase in share of results from jointly controlled entities.

For the full year, IOI registered a net profit of RM1.97 billion or 30.83 sen a share, up 10.1% from RM1.79 billion or 27.96 sen per share for FY12.

Its revenue of RM12.2 billion was 16.4% lower than the RM14.6 billion posted the previous year.

The group attributed the higher net profit for FY13 to translation gain on foreign currency denominated borrowings and improved contributions from all major segments, aside from its plantation segment.

For FY13, it made a translation gain of RM191.4 million while it lost RM327.1 million from the fluctuations in foreign currencies in the previous financial year. Overall, IOI expects its performance will be satisfactory going forward.

“In the resource-based manufacturing segment, the group's oleochemicals business continues to perform well due to relatively low feed stock prices. The refinery and specialty fats businesses will also perform satisfactorily due to a better competitive position as a result of the CPO export duty structure in Malaysia,” said IOI.

The group said it expects its property segment to fare favourably.

As for its plantation segment, IOI expects the business to perform better in the next few months given that palm oil production is seasonally higher. This will offset the prevailing palm oil prices. The board declared a second interim single tier dividend of 8.5 sen, payable on Sept 26.


This article first appeared in The Edge Financial Daily, on August 22, 2013.