Batu Kawan 4Q net profit down 50.9% on weaker CPO prices

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KUALA LUMPUR (Nov 14): Batu Kawan Bhd’s net profit for its fourth quarter ended Sept 30, 2018 (4QFY18) slumped 50.9% to RM71.24 million from RM145.01 million a year ago, as weaker crude palm oil (CPO) and palm kernel (PK) prices dampened income.

As a result, earnings per share for the plantations giant declined to 17.75 sen from 35.88 sen in the year-ago quarter, Batu Kawan said in a stock exchange filing today. Revenue was down 18.5% to RM4.32 billion from RM5.3 billion.

The group’s manufacturing division, which includes its oleochemical operations, also recorded lower profit contribution as it was affected by weaker margins in its Europe operations.

Separately, its investment holdings division recorded a higher loss although its property development division registered marginally higher profit on recognition of development profits.

For the full 2018 financial year (FY18), the group’s net profit declined 20.7% to RM465.48 million from RM586.65 million a year ago, while revenue dropped 12% to RM18.97 billion from RM21.55 billion in FY17.

On prospects, Batu Kawan said its plantation segment will continue to be affected in FY19 by the current depressed palm oil prices.

“The group’s oleochemical business is expected to maintain its performance with higher capacity utilisation and operational efficiencies. The outlook for the chemical division will be impacted by higher energy and raw material costs,” it said.

Shares in Batu Kawan rose 6 sen or 0.36% to RM16.86 today, giving the group a RM6.75 billion market capitalisation.