KLK bottom line falls but revenue rises 27%

PETALING JAYA: Kuala Lumpur Kepong Bhd’s (KLK) net profit plunged 54.6% to RM360.68 million for the first quarter (Q1) ended Dec 31, 2016, against RM795.21 million in the previous corresponding period, in the absence of land disposal gain.

Revenue, however, rose 26.7% from RM4.34 billion to RM5.5 billion, thanks to a 53.6% rise in plantation profit to RM419.4 million arising from improved selling prices of crude palm oil (CPO) and palm kernel despite the increase in cost of CPO production and lower contributions from processing operations.

KLK told Bursa Malaysia, the plantation sector also benefited from the higher net unrealised foreign exchange gain of RM44.4 million, which arose from the translation of inter-company loans advanced and bank borrowings to Indonesian companies.

Average selling prices for CPO and palm kernel in Q1 were RM2,720 and RM2,648 respectively, up 37.9% and 84.3% compared with RM1,972 and RM1,437 in the same quarter a year ago.

KLK’s manufacturing sector profit declined 80.3% to RM24.7 million, dragged down by increasing cost of raw materials, particularly crude palm kernel oil, which narrowed its margins.

Nonetheless, the property sector swung back to the red registering a profit of RM15.9 million, while the farming sector registered a sharp rise in profit to RM36.9 million due to higher crop production from a larger cropped area and better yields.

It said that the current bullish sentiment on CPO price is underpinned by low inventory and weakening ringgit. It cautioned that an expected recovery in fresh fruit bunches production going forward may ease off the CPO price.

“Nevertheless, with forward sales committed into the second quarter, we anticipate a favourable plantations profit for the current financial year,” it said, adding that it expects a satisfactory profit for financial year 2017.

Meanwhile, KLK’s parent company Batu Kawan Bhd registered a 49% decline in Q1 net profit to RM197.54 million for the period ended Dec 31, 2016, against RM387.53 million in the same period a year ago.

Revenue expanded 26.5% from RM4.45 billion to RM5.63 billion. Batu Kawan owns a 46.57% stake in KLK.