Batu Kawan 3Q earnings up 32% on higher contribution from all divisions except plantations

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KUALA LUMPUR (Aug 14): Plantations conglomerate Batu Kawan Bhd has reported a 31.95% increase in net profit in its third quarter ended June 30, 2018 (3QFY18) to RM106.89 million, from RM80.78 million the year before, as all of its segments showed improvement except for its plantations segment. 

This was despite a 10.78% year-on-year decline in its revenue for the quarter to RM4.47 billion, from RM5.01 billion a year ago, Batu Kawan said in a stock exchange filing today. 

The group’s manufacturing segment, which included its oleochemical and chemical divisions, saw a five-fold increase in net profit to RM120.12 million in 3QFY18 from RM19.21 million a year ago, when it had been hit by volatile raw material prices and stock write-downs. 

Meanwhile, the group’s property development and investment holdings arms also recorded increases in contribution in the current quarter. 

Conversely, the plantations division saw net profit decline 73% to RM134.05 million, due to weaker realised crude palm oil (CPO) and palm kernel prices.

Batu Kawan has a 47.03% interest in plantations group Kuala Lumpur Kepong Bhd.

For the nine-month period ended June 30, 2018 (9MFY18), Batu Kawan posted a 10.73% decline in net profit to RM1.08 billion from RM1.2 billion a year ago, due to lower contributions from its plantations and property development segments.

Revenue for the period fell 9.87% to RM14.64 billion, from RM16.25 million in the previous year’s corresponding period.

Going forward, the group foresees a lower overall profit for its current financial year, as it expects its plantations profit to trend lower on the back of a prevailing weak CPO price.

“The decline in plantations’ profit will be mitigated by the higher contributions from oleochemical, and from chemicals division, due to favourable selling prices,” its filing said.

Shares of Batu Kawan closed up 2 sen or 0.12% today, leaving the group with a market capitalisation of RM7.53 billion.