KUALA LUMPUR (May 16): Kuala Lumpur Kepong Bhd (KLK) saw its net profit dip 34.6% to RM189.27 million in the second financial quarter ended March 31, 2018 (2QFY18) from RM289.57 million a year ago, on lower plantations profit.

This resulted in lower earnings per share (EPS) of 17.8 sen in 2QFY18 compared with 27.2 sen in 2QFY17. Quarterly revenue also dropped 14.4% to RM4.69 billion from RM5.47 billion a year ago.

Nevertheless, the group declared an interim dividend of 15 sen per share for the financial year ending Sept 30, 2018 (FY18), payable on Aug 7.

In a filing with Bursa Malaysia today, KLK said plantations profit for 2QFY18 was substantially lower by 49.8% at RM180.3 million compared with RM358.9 million in 2QFY17.

"Despite the 5.5% improvement in fresh fruit bunch production to 958,026 tonnes and the reduction in cost of crude palm oil (CPO) production, the result was affected by a decline in the average selling prices of CPO and palm kernel," it added.

The weak second-quarter results dragged net profit for the cumulative six months ended March 31, 2018 (1HFY18) down 21.6% to RM509.9 million from RM650.25 million. Revenue also fell 9.9% year-on-year to RM9.88 billion from RM10.97 billion.

On current year prospects, KLK expects plantations profits will be lower as CPO prices are expected to remain at current level, which is still lower than last year's.

"Oleochemical operations are performing better than last year with higher capacity utilisations and improved operational efficiencies, despite margin pressure from increasing competition and foreign currency fluctuations.

"Overall, the group anticipates satisfactory, but lower results for FY18," it said.

KLK's parent company Batu Kawan Bhd, meanwhile, posted a 32.8% decline in net profit to RM109.75 million in 2QFY18 from RM163.32 million a year ago, on lower plantations profit and increased foreign exchange (forex) loss.

EPS dropped to 27.32 sen compared with 40.34 sen. Quarterly revenue was also lower by 13.9% to RM4.83 billion in 2QFY18 from RM5.6 billion in 2QFY17.

Batu Kawan announced that its net forex loss widened to RM35.65 million in 2QFY18, from RM3.85 million in 2QFY17, on loans advanced and bank borrowings to its Indonesian subsidiaries.

Batu Kawan's net profit for 1HFY18 fell 20.3% to RM287.65 million from RM360.86 million in 1HFY17, while revenue dipped 9.5% to RM10.17 billion from RM11.23 billion.

In a separate filing, KLK announced the appointment of Lee Jia Zhang — the eldest son of Tan Sri Lee Oi Hian and nephew of Datuk Lee Hau Hian, who are the company's chief executive officer and director respectively — as executive director.

Lee, 35, began his career with Ernst & Young LLP, United Kingdom from 2006 to 2009 and thereafter with KPMG, Kuala Lumpur in 2009, both in audit. He then joined KLK Group in 2010 and has since held various positions in the oleochemical and corporate divisions.

KLK shares closed 10 sen or 0.39% lower at RM25.40 today, with 885,200 shares done, bringing a market capitalisation of RM27.05 billion.