IOI Q2 earnings rise to Rm213.5mil
Plantation firm’s results boosted by foreign currency translation gain
PETALING JAYA: IOI Corp Bhd posted a 9.2% year-on-year (y-o-y) rise in its net profit to Rm213.5mil for the second quarter ended Dec 31, 2019.
The plantation company had also seen a corresponding y-o-y rise in its revenue of 4.26% to Rm1.96bil from Rm1.88bil in the same quarter a year ago.
IOI said its net profit in the latest second quarter had also been boosted by the foreign currency translation gain of Rm85.8mil compared to a foreign currency translation loss of Rm22.8mil in the same quarter a year ago.
This is due to the foreign currency denominated borrowings and deposits as well as the fair value loss on derivative financial instruments from the resourcebased manufacturing segment, it said.
It also said in its Bursa Malaysia filing that its underlying profit has risen on higher contribution from all its business segments.
“The plantation segment profit for the latest second quarter of Rm175.3mil is 49% higher than the profit for the same quarter of the previous year of Rm117.3mil on the back of higher crude palm oil (CPO) price that was realised,” the company said.
It said that the average CPO price that was realised for the most recent quarter was RM2,246 per tonne compared with RM1,932 per tonne in the same quarter a year ago.
IOI said its resource-based manufacturing segment profit for the recent second quarter of Rm29.9mil is 79% lower than the profit recorded in the same period a year ago.
“Excluding the fair value loss/ gain on derivative financial instruments, the underlying profit for resource-based manufacturing segment reported a profit of Rm122.9mil for recent second quarter compared to Rm121.5mil for the same quarter in the previous year,” it said.
It said the higher profit is due mainly to the higher share of associate results from Bunge Loders Croklaan Group B.V. which is offset by lower operational contributions from the oleochemical and refining sub-segments.
Commenting on its outlook moving forward, IOI said it expected its operating performance for the remaining periods of the FY20 to be satisfactory, despite a challenging global economic environment.
“The US dollar-ringgit exchange rate which affects the foreign exchange translation gain/loss arising from our medium to long term US dollar - denominated borrowings is expected to be volatile with the global economic uncertainty caused by the coronavirus outbreak,” it said.
It said the CPO price rally that saw prices exceeding RM3,100 per tonne in early Jan 2020 did not sustain further.
“In mid-january 2020, palm oil price started to take a downward turn.
“In addition to the restrictive import policies imposed by India’s government on Malaysian refined palm oil, palm oil price has also been adversely affected by the coronavirus outbreak in China which is expected to reduce the demand forvegetable oil and disrupt supply flows,” it said.
It is expecting CPO prices to be volatile moving forward due to the uncertainty on the extent and duration of the Coronavirus outbreak, but underpinned by low palm oil inventory and expected higher demand before and during Ramadan in April and May 2020.
“The fresh fruit bunch production for our plantation segment is expected to gradually recover from the low seasonal production cycle in the previous quarter.
“We expect the plantation segment to perform better than the recent second quarter in line with the relatively stronger palm oil price in third quarter of the FY20,” it said.