KUALA LUMPUR (Feb 20): IOI Corp Bhd's net profit fell 97.78% to RM15.6 million or 0.25 sen per share in the second quarter ended Dec 31, 2016 (2QFY17), from RM703.7 million or 11.17 sen a year ago, mainly due to some RM330 million net foreign currency translation loss on its foreign currency-denominated borrowings.

In comparison, it reported a gain of RM227.3 million in net foreign currency translation gain in the same period a year ago.

"Excluding the net foreign currency translation loss or gain, the underlying PBT (profit before tax) of RM458.8 million for 2QFY17 is 26% lower than the underlying PBT of RM616.9 million for 2QFY16," IOI Corp said in a stock exchange filing today.

IOI Corp said the lower underlying PBT was mainly due to lower contribution from its resource-based manufacturing segment, though that was partially cushioned by higher contribution from its plantation segment.

Quarterly revenue, however, climbed 24% to RM3.67 billion from RM2.97 billion a year earlier.

The group declared a first interim dividend of 4.5 sen for the quarter, up 29% from the 3.5 sen it announced previously.

For the cumulative six months (6MFY17), the plantation group posted a net profit of RM120.4 million or 1.92 sen per share, compared to a net loss of RM40.7 million or 0.64 sen in the same period in the previous year, as revenue grew 15% to RM6.96 billion from RM6.06 billion.

Moving ahead, IOI Corp said crude palm oil and palm kernel prices are expected to remain firm in the current quarter due to low stocks.

"Going into the last quarter of the financial year, we anticipate that prices will not be significantly impacted by the seasonal increase in production. The plantation segment is therefore expected to perform better than the previous financial year," it said, though it noted its resource-based manufacturing segment is expected to be affected by current firm palm oil and palm kernel prices.

"The volatility of dollar ringgit exchange rate will continue to affect the non-cash flow foreign exchange translation gain/loss arising mainly from our medium to long dated US dollar-denominated borrowings, as well as the fair value gain/loss on derivative financial instruments which are primarily trade-related forex forward contracts," the group added.

IOI Corp also said it has refinanced or swapped some of its US dollar loans into euro-denominated loans to diversify its forex risks and reduce its borrowings cost.

Meanwhile, IOI Corp said it is well on the way to rebuilding its sustainability credentials via more active engagement with shareholders as it delivers more on its sustainable commitments, which it sees will benefit its downstream manufacturing business, particularly the specialty oils and fats sub-segment.

"Overall, the group expects its operating performance for FY2017 to be satisfactory," it added.

Shares of IOI Corp traded unchanged at RM4.63 today, with 4.09 million shares traded, for a market capitalisation of RM29.11 billion.