This article first appeared in The Edge Financial Daily, on May 17, 2016.

KUALA LUMPUR: Kuala Lumpur Kepong Bhd (KLK) saw its net profit for the second quarter ended March 31, 2016 (2QFY16) drop 24.3% to RM168.53 million or 15.8 sen a share, from RM222.54 million or 20.9 sen a share a year ago, dragged down by both its plantation and property sectors.

In a filing with Bursa Malaysia, KLK said its plantation profit was impacted by a net unrealised foreign-exchange loss of RM35.8 million arising from the translation of loans advanced and bank borrowings to Indonesian companies, while its property sector was affected by a slowdown in the property market.

KLK declared an interim single-tier dividend of 15 sen per share, with the ex-date on July 14, and to be paid on Aug 9. Revenue came in at RM3.7 billion, 20.8% higher than its 2QFY15 revenue of RM3.07 billion, thanks to improved performance by its plantation processing operations.

For the first half of FY16 (1HFY16), KLK reported a net profit of RM963.74 million, more than double the RM436.74 million reported for 1HFY15, as a result of higher profit from its manufacturing units.

Revenue was 30.1% higher at RM8.04 billion, compared with RM6.18 billion for 1HFY15, due to higher sales of its manufacturing division.

KLK said the outlook for its plantation sector is challenging due to uncertain economic and weather conditions, together with the anticipated higher fresh fruit bunch production in the coming months, and a narrower discount of palm oil to soybean oil.

But favourable results are anticipated for its oleochemical division through increased capacities from key plants’ expansion coming fully on stream, and the continuing drive for operational efficiencies and productivity enhancement.

“Without taking into account the surplus on sale of plantation land realised in the first quarter, the group’s profit for the current financial year would be satisfactory,” said KLK.