Processing ops cushion fall in KLK's Q2 net profit

PETALING JAYA: Kuala Lumpur Kepong Bhd's (KLK) net profit for the second quarter ended March 31, 2016 fell 24.27% to RM168.53 million from RM222.54 million a year ago, due to lower profits from plantations and properties.
This was despite growth in revenue, which rose 20.80% growth to RM3.70 billion from RM3.07 billion a year ago, the group said in a filing with Bursa Malaysia yesterday.
Plantations profit declined 20.5% to RM125.6 million from RM157.9 million a year ago, due to a net unrealised foreign exchange loss of RM35.8 million, while the properties sector registered a 82.9% reduction in profit to RM5 million due to a slow down in the property sector.
"However, the reduction in profit was mitigated by the improved performance from the processing operations," it said.
The average crude palm oil and palm kernel selling prices realised were RM2,205 per tonne ex-mill and RM1,770 per tonne ex-mill respectively during the quarter.
Meanwhile, the manufacturing sector's profit rose 61% to RM100.2 million from RM62.3 million a year ago.
"Europe and China operations contributed to the improved profit through better sales volume. However, the increasing cost of raw materials had narrowed profit margins, especially the Malaysian entities," it said.
The oleochemical division's profit rose 66.9% to RM94.3 million from RM56.5 million while profit from other manufacturing units was flat at RM5.9 million.
For the six months ended March 31, 2016, net profit more than doubled to RM963.74 million from RM436.74 million a year ago while revenue rose 30.11% to RM8.04 billion from RM6.18 billion a year ago.
The group declared an interim single-tier dividend of 15 sen per share in respect of the financial year ending Sept 30, 2016 (FY16), which will be paid on Aug 9, 2016.
KLK expects the uncertain economic and weather conditions, the anticipated higher FFB production in the coming months and narrower discount of palm oil to soybean oil to bear some negative effects on palm oil prices, despite the lower production and increase in bio-diesel consumption in Indonesia.
"In view of these factors, we expect the performance of the plantations sector to be challenging for FY16," it said.
It expects the oleochemical division to post favourable results through the increased capacities from key plants expansion coming fully onstream and the continuing drive for operational efficiencies and productivity enhancement."