IOI Corp's 3Q sees a net loss of RM188m on higher net forex loss

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KUALA LUMPUR (May 14): IOI Corp Bhd posted a net loss of RM188 million in the third quarter ended March 31, 2015 (3QFY15) from a net profit of RM2.18 billion a year ago, mainly due to higher net foreign currency translation loss.

This translated into a loss per share of 2.95 sen, compared to an earnings per share (EPS) of 34.2 sen.

Revenue declined 4.25% to RM2.78 billion, from RM2.9 billion a year earlier.

In a filing with Bursa Malaysia today, IOI Corp (fundamental: 1.7; valuation: 2.1) said the group’s lower profit was also due to lower contribution from both plantation and resource-based manufacturing segments.

Lower earnings from plantation business was due to lower fresh fruit bunches production and lower crude palm oil (CPO) price, while lower profit from resource-based manufacturing business was due to lower margin and sales volume.

IOI Corp also explained that during the quarter under review, there was a net repayment of US$526 million (approximately RM1.88 billion) on its US dollar denominated borrowings.

“As a result, the impact of the dollar-ringgit volatility on our US dollar denominated borrowings will be lower in the future,” it added.

For the nine months ended March 31 (9MFY15), IOI Corp posted a net profit of RM8.2 million, plunged 99.72% from RM2.97 billion. Consequently, EPS for 9MFY15 was at 0.13 sen, compared with 46.48 sen in 9MFY14.

Revenue also slipped 4.41% to RM8.68 billion, from RM9.08 billion in 9MFY14.

The net foreign currency translation loss on its foreign currency denominated borrowings for 9MFY15 amounted to RM658.5 million, according to the interim report attached with IOI Corp’s filing to Bursa.

On short-term prospects, IOI Corp said it expects CPO price to hover between RM2,050 and RM2,250 per tonne in the next three months.

“Going forward, we expect higher contribution from our associate in Indonesia, Bumitama Agri Ltd, as more of their palm trees enter prime age, and also higher fresh fruit bunch production from our Malaysian plantations as the palm trees enter into the seasonal higher production period,” it added.

In the resource-based manufacturing segment, the group expects its specialty oils and fats and oleochemical sub-segments to perform satisfactorily, given the resilient demand from both the food and oleochemical sectors, and the recent commissioning of its new fatty ester plant to cater for the food and pharmaceutical sectors.

"Overall, we expect the group’s underlying performance for the remaining final quarter, to be satisfactory," it added.

IOI Corp closed 9 sen or 2.09% lower at RM4.21 today, giving it a market capitalisation of RM26.7 billion.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)