IOI Corp's 2Q profit slumps 67% as lower CPO, PK prices weigh

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KUALA LUMPUR (Feb 20): Lower contribution from the plantation segment, coupled with net foreign currency translation loss on its foreign-currency denominated borrowings and deposits, dragged IOI Corp Bhd's net profit down 67% in its second quarter ended Dec 31, 2018 (2QFY19).

Consequently, its 2QFY19 net profit fell to RM195.5 million from RM595.9 million in the previous year, which trimmed earnings per share to 3.11 sen from 9.48 sen. Revenue slipped 6.4% to RM1.88 billion from RM2.01 billion.

Notwithstanding the weaker 2QFY19 results, the group declared a first interim dividend of 3.5 sen which will be paid on March 22. In comparison, the group posted a 4.5 sen payout in the same quarter last year.

In its stock exchange filing announcing its results, the group said it incurred a net foreign currency translation loss of RM22.8 million versus a gain of RM188.1 million in the corresponding quarter last year.

The plantation segment, meanwhile, was impacted by lower crude palm oil and palm kernel prices realised, the group said, which pulled the segment's profit down by 66% year-on-year to RM117.3 million. "Average CPO price realised for 2Q FY2019 was RM1,932/MT (2Q FY2018 – RM2,644/MT) and average PK price realised for 2Q FY2019 was RM1,444/MT (2Q FY2018 – RM2,621/MT)," the group said.

Its resource-based manufacturing segment, however, performed better, registering a higher profit of RM139.3 million compared with RM128.3 million a year ago, thanks to higher sales volume and margins from its oleochemical and refining sub-segments, as well as share of results of its associate Bunge Loders Croklaan Group B.V.

For the cumulative six months ended Dec 31, 2018, IOI Corp's cumulative net profit for first half of FY19 fell 65% to RM339.3 million from RM955.9 million previously, while revenue slipped 3% to RM3.76 billion from RM3.88 billion.

The group said it expects to perform satisfactorily in the next two quarters in FY2019 on the back of improved CPO prices and rising demand in its oleochemical business.

IOI closed up five sen or 1.07% to RM4.73, for a market value of RM28.88 billion. Some 5.51 million shares were traded.