KLK net profit 34.6% lower
Second quarter results weighed down by plantation segment
PETALING JAYA: Kuala Lumpur Kepong Bhd’s (KLK) net profit for the second quarter ended March 31 fell by 34.6% to RM189.27mil, weighed down by its plantation segment.
Revenue fell as well by 14.4% to RM4.69bil from RM5.47bil in the same quarter a year ago.
KLK’s plantation segment was affected after crude palm oil (CPO) and palm kernel prices declined by 12.8% and 20.6%, respectively, in the year-to-date (YTD) period compared to the same period of the previous year.
The company said in an announcement to Bursa Malaysia that its plantation segment’s profit recorded a sharp decline of 42.6% to RM446.7mil in the YTD period.
Basic earnings per share in the quarter fell to 17.8 sen from 27.2 sen in the same quarter a year ago.
KLK’s plantation segment was also affected by the lower sales volume of CPO and net unrealised foreign-exchange (forex) translation losses of RM65.4mil on loans advanced and bank borrowings to its Indonesian subsidiaries.
YTD, however, KLK saw a net gain from forex translations of RM40.5mil.
While the plantation segment was weak, its manufacturing segment’s profit more than doubled in the second quarter to RM110.9mil due to an increase in the sales volume.
“However, revenue was only marginally higher at RM2.67bil, owing to the drop in selling prices. The improved performance was underpinned by favourable margins due to the lower cost of raw materials,” it said.
“The results of this segment had recognised an unrealised gain of RM21.3mil arising from the fair value changes on outstanding derivative contracts,” the company added in the notes to its financial statements.
The company said its oleochemical division registered a sharp improvement in the current quarter’s profit to RM111.8mil from RM47.1mil in the same quarter of the previous year.
However, it said its other manufacturing units incurred a loss of RM951,000 from a profit position of RM5mil in the same quarter of the previous financial year.
Its property segment, meanwhile, recorded a much stronger profit of RM6.6mil from RM1.2mil in the same quarter of the previous year due to a 64.8% increase in revenue to RM37.7mil.
Moving forward, KLK said CPO prices are expected to remain at current levels, which are still lower than last year’s and this would affect plantation profits which would be lower.
“Oleochemical operations are performing better than last year with higher capacity utilisations and improved operational efficiencies, despite margin pressures from increasing competition and foreign currency fluctuations,” it said.
“Overall, we anticipate a satisfactory but lower result for the (entire) financial year,” the company added.