PETALING JAYA: IOI Corp Bhd’s net profit for the third quarter ended March 31, 2020 plunged 100% to RM100,000 from RM245.8 million a year go due to foreign currency translation losses on foreign currency denominated borrowings.
Its revenue however, jumped 8% to RM2.03 billion from RM1.89 billion in third quarter 2019 (Q3’19).
For the nine-month period, the group’s net profit fell 38% to RM362.6 million from RM585.1 million a year ago due to foreign currency translation losses on foreign currency denominated borrowings.
Revenue was 2% higher at RM5.76 billion versus RM5.65 billion in the previous year.
Looking ahead, the group said in view of the expected significant increase in oil palm fruit production during Q4’20 which will counter the effect of the low palm oil price, the financial performance of its plantation segment in Q4’20 is likely to be similar to that in Q3’20.
IOI’s oleochemical sub-segment has seen an increase in demand due to the Covid-19 pandemic, and this is expected to offset the reduced demand and offtake from other sectors arising from the disruptions caused by the pandemic lockdowns.
Its refinery sub-segment is expected to perform better during Q4’20 due to the healthy refining and fractionation margins. However, the specialty fats sub-segment, which comprises associate company Bunge Loders Croklaan, is expected to be affected by the lockdowns in Europe and US which have disrupted demand and transport logistics for their products in these regions.
The strong US dollar, though favourable for palm oil export price, is likely to result in significant forex translation loss arising from its US dollar-denominated borrowings.
