KUALA LUMPUR: Kuala Lumpur Kepong Bhd’s (KLK) net profit for its first quarter ended December 2014 of financial year 2015 (1QFY15) dropped 26.81% to RM214.2 million or 20.1 sen per share from RM292.68 million or 27.5 sen per share a year ago, on weaker contributions from its plantation, manufacturing and oleo-chemical businesses.

Revenue, however, jumped 24.87% to RM3.11 billion from RM2.49 billion in 1QFY14, boosted by higher revenue from its property, manufacturing and plantation business, which grew 9%, 11.8% and 40.9% respectively, its filing to Bursa Malaysia this evening showed.

However, on a segmental basis, the plantations division saw its profit drop 5.7% to RM242.1 million from RM256.7 million, mainly due to weaker selling prices of crude palm oil (CPO) and rubber, reduced crop production as well as higher production cost.

As for its manufacturing division, KLK (fundamental: 1.3; valuation: 0.7) recorded a profit of RM29.5 million, a 63.1% drop from RM80 million previously, due to negative margins from the fatty alcohol and surfactant businesses. The low petroleum price, KLK added, had made synthetic alcohol very competitive and destabilised the fatty alcohol price.

Meanwhile, the property division saw its segment profit rise 5% to RM13.9 million from RM13.2 million previously, in which KLK had recognised profit contribution from its development project in Bandar Seri Coalfields.

Going forward, KLK expects palm oil prices to be buoyed by the weakening ringgit and tight supply of the commodity, but gains are expected to be capped by the current high soybean production.

In view of these, plantations’ profit for the current financial year is expected to be lower than FY14.

“The current low petroleum price has affected the fatty alcohol and surfactant businesses of our oleo-chemical division. However, this division anticipates a satisfactory level of profit for the current financial year on account of the additional capacities from the new plants coming on stream and the initiatives for operational efficiencies and productivity improvement,” it said.

KLK also expects satisfactory profit for the current financial year, albeit lower than that of the previous financial year.

The stock closed 18 sen higher at RM23.18 yesterday, giving it a market capitalisation of RM24.77 billion.

This article first appeared in The Edge Financial Daily, on February 17, 2015.