Highlight IOI Corp 3Q profit soars 283% to RM2.18b

by **Cals** Fri 23 May 2014, 00:17

Highlight IOI Corp 3Q profit soars 283% to RM2.18b

Business & Markets 2014

Written by Jeffrey Tan of theedgemalaysia.com

Thursday, 22 May 2014 14:18

KUALA LUMPUR (May 22): Plantation firm IOI Corp Bhd’s net profit soared 283% to RM2.18 billion in the third quarter ended March 31, 2014 (3QFY14) from RM567.8 million a year earlier. Revenue rose 0.9% to RM2.89 billion from RM2.87 billion.

In a statement to the stock exchange, IOI Corp said the significant increase in profit was due mainly to the one-off net extraordinary gain of RM1.83 billion from the demerger of the group's property-related businesses in January this year.

The property operations are now parked under IOI Properties Group Bhd.

IOI Corp said excluding the demerger gain, and profit from property-related businesses, the group’s operating profit rose 11% to RM524.5 million from RM473.5 million.

The group said this was due to better performance from the plantation business, but offset by lower contribution from the downstream resource-based manufacturing segment.

IOI Corp said its higher plantation profit was due mainly to higher crude palm oil (CPO) and palm kernel prices, and an increase in income contribution from its associate in Indonesia.

Downstream, IOI Corp said its lower manufacturing profit was due to lower margin from the refinery and oleochemicals sub-segments amid lower sales volume from its refinery.

For the nine-month period, IOI Corp said net profit rose to RM2.97 billion from RM1.7 billion a year earlier. Revenue fell to RM9.08 billion from RM9.26 billion.

IOI Corp said the demerger gain was offset by the translation loss of RM141.6 million on foreign currency-denominated borrowings.

This compares to a translation gain of RM362.4 million a year earlier.

IOI Corp said excluding the non-recurring items above, its underlying profit was higher mainly due to higher contribution from the resource-based manufacturing segment but offset by lower contribution from the plantation segment.

Looking ahead, IOI Corp said it was optimistic on CPO prices on global biodiesel mandates and festive demand.

Weather factors are also seen supporting the commodity's prices.

“With higher biodiesel mandates in both Malaysia and Indonesia and the increase in demand from India and Pakistan due to the festive season, CPO prices are likely to be well supported at the current level in the remaining quarter in FY14.

“In the medium term, the likely occurrence of El Nino during the second half of the year may give a further boost to CPO prices,” said IOI Corp.