This article first appeared in The Edge Financial Daily on August 16, 2019

KUALA LUMPUR: IOI Corp Bhd’s net profit for the fourth quarter ended June 30, 2019 (4QFY19) rose by 30% year-on-year to RM46.6 million from RM35.8 million, despite a slight dip in revenue, with earnings mainly lifted by lower net foreign currency translation losses on its borrowings and deposits.

This raised its quarterly earnings per share to 0.74 sen compared with 0.57 sen previously, the group’s stock exchange filing yesterday showed.

The group’s board proposed a final single-tier dividend of 4.5 sen per ordinary share in respect of FY19, to be approved by shareholders. If approved, its cumulative dividend payout for FY19 would be eight sen as opposed to 20.5 sen for FY18.

According to IOI Corp, excluding the total net foreign currency translation loss of RM75.4 million — versus RM108.3 million a year ago — on its foreign currency-denominated borrowings and deposits, its underlying profit before tax (PBT) for the quarter would be 15% lower y-o-y due to lower contributions from its plantation segment. Revenue fell 3.5% to RM1.74 billion from RM1.8 billion.

The group said the plantation segment saw a 33% y-o-y drop in profit due to lower crude palm oil (CPO) and palm kernel (PK) prices realised. “Average CPO and PK prices realised for 4QFY19 were RM1,988 per tonne (4QFY18: RM2,409) and RM1,127 per tonne (4QFY18: RM1,803) respectively,” it said.

However, the group’s full-year net profit fell 79% to RM631.7 million against RM3.06 billion for the previous year due to lower operating profit and net foreign currency translation losses, while revenue dropped marginally to RM7.39 billion from RM7.42 billion.

“Excluding the total net foreign currency translation loss of RM102.1 million (FY18: a gain of RM318.3 million) on foreign currency-denominated borrowings and deposits as well as a fair value gain on derivative financial instruments from the resource-based manufacturing segment of RM28.9 million (FY18: RM300,000), the underlying PBT of RM945.8 million for FY19 is 24% lower than the underlying PBT of RM1.25 billion for FY18 due mainly to lower contributions from the plantation segment, mitigated by higher contributions from the resource-based manufacturing segment,” it said.

For FY20, the group expects its operating performance to be satisfactory as it anticipates palm oil prices to recover gradually as palm oil stocks decline from record high levels in December 2018.

“We expect our total fresh fruit bunch production during FY20 to improve slightly with higher production from young Indonesian planting offsetting the temporary loss on a higher replanting rate for our Sabah plantations.

“Coupled with the anticipated improvement in crude palm oil prices, we expect the plantation segment’s performance to improve in the coming financial year,” it said.

IOI Corp shares closed three sen or 0.71% higher at RM4.23 yesterday, with 2.65 million shares done. It has a market capitalisation of RM26.58 billion.