This article first appeared in The Edge Financial Daily, on May 19, 2016.

KUALA LUMPUR: IOI Corp Bhd, which returned to the black with a net profit of RM748.4 million or 11.88 sen per share in its third financial quarter ended March 31, 2016 (3QFY16), said it is taking all appropriate actions to implement the action plan as required by the Roundtable on Sustainable Palm Oil (RSPO) and expects the actions to be completed by end-May.

The RSPO certification of IOI Group was suspended on April 1 for the alleged breaching of its principles on environmental permits and allegedly clearing more land than authorised in certain plantations in Indonesia. The suspension will result in the group’s specialty oils and fats subsegment of its resource-based manufacturing segment to face challenges in the next few months, said IOI Corp.

IOI Corp attributed the return to profitability, compared to a net loss of RM188 million or 2.95 sen loss per share in 3QFY15, to higher contribution from its resource-based manufacturing segment and currency translation gain of RM432.8 million. Revenue grew 3.9% to RM2.87 billion in 3QFY16 from RM2.76 billion a year ago.

In a filing with Bursa Malaysia yesterday, IOI Corp said the resource-based manufacturing segment posted a 196% increase in profit to RM305.1 million in 3QFY16 from RM102.9 million in 3QFY15, due mainly to fair value gain on derivative financial instruments of RM184.9 million.

For the cumulative nine months’  period (9MFY16), IOI Corp’s net profit surged 92 times to RM754.2 million from RM8.2 million in 9MFY15, while revenue grew 3.6% to RM8.92 billion from RM8.61 billion. Moving forward, IOI Corp expects crude palm oil prices to remain firm at the prevailing level of between RM2,500 per tonne and RM2,700 per tonne during the remaining financial quarter ending June 30, 2016 in view of the increased demand for palm oil during the coming Ramadan month and festival.

The group also sees the volatility of the ringgit against the US dollar continue to impact its non-cash flow foreign-exchange translation gain/loss, arising from its medium- to long-dated US dollar-denominated borrowings, though at a lesser extent than two to three quarters ago.

“Overall, we expect our underlying operating results for the remaining financial quarter to be satisfactory,” it said. IOI Corp shares closed unchanged at RM4.18 yesterday, with a market capitalisation of RM26.31 billion.