IOI Corp 2QFY15 earnings down 96 per cent to RM19.6 million

KUALA LUMPUR: IOI Corporation Bhd’s (IOI Corp) earnings for the second quarter of financial year 2015 (2QFY15) plunged 96 per cent year-on-year (y-o-y) to RM19.6 million.

The plantation company in a filing to Bursa Malaysia said its net profit for the first half of financial year 2015 (1HFY15) also dropped 75 per cent y-o-y to RM196.2 million.

IOI Corp said its turnover for 2QFY15 and 1HFY15 also declined. Turnover for 2QFY15 dipped slightly by 1.9 per cent to RM2.88 billion while revenue for 1HFY15 decreased by 4.5 per cent to RM5.9 billion.

In its notes accompanying the release of the company’s latest financial performance, IOI Corp said the weaker profit was attributed to an unrealised fair value loss in foreign currency forward exchange contracts arising from weaker ringgit from its resource-based manufacturing segment.

Additionally, its plantation division also recorded lower profit due to lower crude palm oil (CPO) and palm kernel (PK) prices realised.

Going forward, IOI Corp expects CPO price to move within the range of RM2,150 to RM2,370 per tonne over the next two months, underpinned by the wet-weather induced lower production and lower inventory.

In the medium term, the CPO price is expected to be supported by the Indonesian government’s move to increase its biofuel subsidy and the expected increase in palm oil consumption after the abnormally cold Northern Hemisphere winter.

IOI Corp added,”Our Indonesian plantation subsidiary is expected to increase its fresh fruit bunches (FFB) production substantially due to the young age profile of its trees. “The completion of our oil mill in Indonesia during the first quarter of year 2015 will help to increase the efficiency and profitability to our Indonesian operations.

“In addition, we also expect higher contribution from our associate in Indonesia, Bumitama Agri Ltd in view of their increasing FFB production as their palm trees enter prime age.

“In the resource-based manufacturing segment, the group expects its specialty oils and fats and oleochemicals sub-segments to perform satisfactorily given the resilient demand from both the food and oleochemicals sectors.

“The expected volatility of dollar ringgit exchange rate will continue to impact the non-cash flow foreign exchange translationgainsorlossesonourmostly medium to long dated US dollar denominated borrowings in our reported results.

“However, we expect the group’s underlying performance for the remaining financial period of 2015 to be satisfactory,” the company said.