IOI Corp Rakes In RM277.9m in Q1
16/11/2020The Sun Daily

KUALA LUMPUR: Integrated palm oil producer IOI Corporation Bhd’s (IOI Corp) net profit increased to RM277.9 million in the first financial quarter (Q1) ended Sept 30, 2020, from RM149.0 million in the same period last year.

The 86.5 per cent surge was partly due to a net foreign currency translation gain of RM98.5 million on foreign currency-denominated borrowings and deposits, but it was offset by a fair value loss on derivative financial instruments of RM49.8 million from the resource-based manufacturing segment.

Excluding these items, the underlying profit before tax for the quarter was RM311.5 million (as opposed to RM360.2 million), up 21 per cent year-on-year due mainly to higher contribution from the plantation segment, IOI Corp said.

However, the increase was offset by lower contribution from the resource-based manufacturing segment, the group said in a filing with Bursa Malaysia today.

Meanwhile, revenue for the quarter jumped to RM2.48 billion from RM1.78 billion a year earlier.

IOI Corp’s plantation segment profit for the quarter under review stood at RM273.6 million, a 116 per cent jump against the profit for the same quarter last year.

“This is on the back of higher crude palm oil (CPO) and palm kernel (PK) prices as well as higher fresh fruit bunches (FFB) production,” said IOI Corp.

The group recorded FFB production of 878,701 metric tonnes (MT) during the quarter versus 801,548 MT a year ago.

Meanwhile, average CPO price achieved in the three months was RM2,579 per MT (versus RM2,014 per MT in the corresponding period last year) and average PK price was RM1,486 per MT (against RM1,126 MT a year earlier).

Moving forward, IOI Corp said the CPO price had increased sharply, reaching an eight-year high this month.

“The CPO price is expected to remain high by more than RM3,000 a tonne until February 2021, due to low palm oil inventory and seasonal low crop production until early next year, although its narrowing price discount against other competing vegetable oils and the coming winter in the Northern Hemisphere will dampen demand,” it added.

IOI Corp said oil palm crop production was expected to decline until January or February next year due to the low production season.

“Although the operations in the plantations are not directly affected by restrictions under the Conditional Movement Control Order, the freeze on new intake of foreign workers by the government has resulted in a labour shortage which is expected to be more severe as months go by,” it added.

The group expects good financial performance from its plantation segment at least for the second and third quarters for this financial year ending June 30, 2021, due to strong palm oil price forecast until February next year.

For the refinery and commodity market sub-segment within IOI Corp’s resource-based manufacturing segment, the refining and fractionation margins are expected to be negative or near break-even due to the high CPO price and lower sales during the winter months in the Northern Hemisphere.