IOI Corp 2Q net profit down 71%

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KUALA LUMPUR: IOI Corporation Bhd’s second-quarter (2Q) earnings fell 71% to RM168.58 million mainly due to declining crude palm oil prices, foreign exchange (forex) losses and customer defaults.

Announcing a set of weaker results for the quarter ended on Dec 31, 2008, IOI Corp said on Feb 20 that group pre-tax profit fell by 28% to RM333.5 million from RM462.5 million  a year ago.

Revenue was RM3.72 billion compared with RM3.45 billion. Earnings per share (EPS) was 2.86 sen compared with 9.71 sen. It declared a dividend of three sen per share compared with seven sen a year ago.

It said the weaker 2Q earnings were due to a lower operating profit of RM527.8 million from the plantation segment, which was 7% lower than the previous quarter due mainly to declining CPO prices.

The property segment reported a 10% or RM7 million decline due mainly to the soft property market which resulted in lower sales.

“The manufacturing segment also reported a significant drop in profit by RM230.0 million due mainly to the recognition of realised forex losses, reduction in sales volume and margins as well as customer defaults on high priced contracts all lumped into the current quarter,” it said.

In the first half, its net profit fell to RM459.08 million from RM1.03 billion a year ago. Revenue also declined to RM8.38 billion from RM6.58 billion. EPS was 7.75 sen compared with 17.05 sen.

It said pre-tax profit fell to RM796 million from RM1.42 billion due mainly to realised forex losses of RM120.9 million and customer defaults on high priced contracts in the manufacturing segment, unrealised translation losses of RM249.6 million on US dollar denominated long term borrowings as well as the softening property market.

Its subsidiary, IOI Properties Bhd’s 2Q earnings fell 66% to RNM30.95 million from RM90.91 million due to the weakening property market. Revenue fell to RM122.52 million from RM191.32 million. EPS was 3.81 sen compared with 13.97 sen.