KLK 1Q earnings rise 6.6% while revenue falls 21%

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KUALA LUMPUR (Feb 18): Plantation player Kuala Lumpur Kepong Bhd (KLK) managed to record a minimal 6.6% rise in its net profit for the first financial quarter ended Dec 31, 2018 (1QFY19) to RM250.92 million, from RM235.36 million, despite a decline in group revenue. 

Its Bursa Malaysia filing today showed revenue dropped 21.1% to RM4.085 billion from RM5.175 billion in the previous corresponding quarter. 

Earnings per share rose to 23.6 sen, from 22.1 sen per share. 

In the filing, KLK noted that its plantation division's profit declined sharply by 58.0% to RM127.5 million from RM303.6 million in 1QFY18, despite a 7.9% improvement in fresh fruit bunches (FFB) production to 1,105,465 metric tons (mt). It said the current quarter's profit was impacted by the drop in crude palm oil's (CPO) and palm kernels' (PK) selling prices. 

The company said in 1QFY19 that the selling prices of Crude Palm Oil stood at RM1840 per mt, lower 28.7% versus RM2581 per mt in 1QFY18. Meanwhile, Palm Kernel was at RM1,375 per mt, down 45% from RM 2,488 per mt.

Besides that, KLK's manufacturing segment also recorded a fall in profit of 28.8% to RM98.0 million from RM137.7 million in 1QFY18, with 12.4% lower revenue at RM2.21 billion compared with RM2.52 billion, as a result of decrease in selling prices. 

However, these were offset by its property segment which achieved a much higher profit at RM11.1 million, as well as its farming sector's profit which was substantially higher at RM56.5 million, due to increase in crop production as a result of better yields and larger cropped area. 

Additionally, the group recorded a foreign currency exchange gain of RM38 million compared with a loss of RM120.4 million in 1QFY18, as well as a surplus of RM22.5 million compared with a surplus of RM13.6 million arising from government acquisition of a plantation land. 

On its current year's prospects, KLK observed that the prevailing CPO prices have recovered from the low levels in the preceding quarter. 

"Should such recovery be sustained, we are optimistic that the prospects for plantation profit for financial year 2019 [FY19] will be satisfactory," it said. 

Besides that, its oleochemical division is anticipated to sustain its performance, through increase in capacity utilisation and improvement in margins. 

"Overall, the group expects a reasonably satisfactory profit for the financial year 2019," KLK added. 

At market close today, shares of KLK shed 6 sen or 0.24% to RM24.74, for a market capitalisation of RM26.35 billion.