PETALING JAYA: IOI Corp Bhd expects the outlook for its oleochemical sub-segment to remain subdued, in light of the weak global economic environment and rising geopolitical tensions that undermined global trade.

In a filing with Bursa Malaysia, the company said the expected better demand from China will help to alleviate some of the global demand slow down.

“Our new fatty acid and soap noodle plants will also help to lower our production cost and give us the flexibility to tailor our products to meet customer requirements.” For its fourth quarter ended June 30, 2023, IOI Corp’s net profit dropped to RM37.2mil from RM541.8mil in the previous corresponding period, while revenue in the fourth quarter was lower at RM1.95bil against RM3.74bil in the previous corresponding period.

Basic earnings per share stood at 0.60 sen versus 8.72 sen previously.

IOI Corp said the lower earnings were due to lower contributions from all segments.

For the financial year ended June 30, 2023 (FY23), IOI Corp’s net profit dipped to RM1.1bil from RM1.7bil previously, while revenue slipped to RM11.58bil from RM15.58bil a year earlier.

IOI Corp said crude palm oil (CPO) price has been volatile since May 2023, ranging from RM3,300 to RM4,100 per tonne.

“We foresee CPO price to remain range-bound between RM3,500 to RM4,000 per tonne until the end of the year, before moving higher as a result of lower palm fruits production due to the effects of El Nino phenomenon, which is expected to intensify in the coming months.”

For its plantation segment, IOI Corp forecasts a moderate increase in fresh fruit bunches production for FY24, notwithstanding the adverse effects of the abovementioned El Nino phenomenon and the ongoing accelerated replanting programme in Sabah.

“The growth would be achieved primarily through increased efficiency from our fully replenished new workers in Peninsular Malaysia and higher production from the young palm trees in our Indonesian plantations.

“At the same time, production cost is expected to be considerably lower due to the higher palm fruits yield and decline in fertiliser as well as diesel costs compared to FY23.” All things considered, IOI Corp said it is optimistic of a satisfactory financial performance for the plantation segment in FY24.

Regarding its refinery and commodity marketing sub-segment, IOI Corp said it expects the division to continue to face low or negative refining margins, due to stiff competition from Indonesian refiners who benefit from their country’s CPO export duty policy.