KUALA LUMPUR (Nov 12): IOI Corp Bhd posted a 60% decline in its net profit for the first quarter ended Sept 30, 2018 (1QFY19) to RM143.8 million from RM360 million a year ago, on lower operating profit and a currency translation loss on foreign currency-denominated borrowings and deposits.

Its total net foreign currency translation loss in the quarter amounted to RM61.1 million versus a gain of RM68.1 million in the year before, IOI's quarterly results filing today showed.

Excluding that and a fair value gain on derivative financial instruments from the resource-based manufacturing segment of RM20.2 million (1QFY18-loss of RM21.5 million), the group's underlying profit before tax was 41% lower year-on-year (y-o-y) at RM236.1 million due to lower contribution from all its business segments.

The group's 1QFY19 earnings per share declined y-o-y to 2.29 sen from 5.73 sen. Revenue for 1QFY19 saw a slight uptick of 0.54% to RM1.88 billion from RM1.87 billion a year ago.

The group is more optimistic on the upcoming quarter's palm oil production level compared to the "unusually low production in 1QFY19", though it said lower palm oil price will likely result in the plantation segment's financial performance for 2QFY19 to be lower than 1QFY19.

"With lower exports during the end of the year period, the current high palm oil inventories is expected to persist in the near future," it said, adding it expects crude palm oil (CPO) prices to be supported at between RM2,000 and RM2,250 per tonne until the beginning of 2019.

IOI also expects to record further non-cash forex loss on medium- to long-term US dollar-denominated borrowings due to the strength of the greenback. "However, this translation loss will be mitigated partly by the translation gain in our US dollar-denominated cash deposits from the balance of the Loders Croklaan equity divestment proceeds," it said.

"The group expects its financial performance for the next quarter to be satisfactory, albeit slightly lower than the previous quarter due to the lower CPO price," IOI added.

IOI shares declined 7 sen or 1.53% to close at RM4.49 today, leaving the group with a market capitalisation of RM27.42 billion.