IOI Corp 1QFY22 Net Profit Marginally Lower Amid Forex Translation Loss
24/11/2021The Edge Markets

(File pic by IOI Corporation).

KUALA LUMPUR (Nov 24): IOI Corp Bhd reported a marginally lower net profit of RM277.6 million for the first quarter ended Sept 30, 2021 (1QFY22), from RM277.9 million in the previous year’s corresponding quarter, due to a foreign currency translation loss recorded during the quarter.

Revenue for the quarter increased 47% to RM3.63 billion, from RM2.48 billion a year earlier.

Earnings per share, however, rose to 4.45 sen from 4.43 sen a year ago.

In its filing with the bourse, the group said its pre-tax profit for the quarter stood at RM446.8 million, up 24% from RM360.2 million.

Excluding the total net foreign currency translation loss of RM26.3 million on foreign currency denominated borrowings and deposits and the net fair value loss on derivative financial instruments of RM134.4 million, it said its underlying pre-tax profit would be 78% higher year-on-year at RM341.5 million.

It attributed the growth to higher contributions from all segments.

IOI’s plantation segment saw a 78% increase in profit contribution to RM487 million, mainly due to higher crude palm oil (CPO) and palm kernel (PK) prices realised, partly offset by lower fresh fruit bunch (FFB) production.

Meanwhile, the resource-based manufacturing segment recorded a 16% increase in segment profit to RM46.1 million for the quarter.

Excluding the one-off fair value loss, the segment’s underlying profit stood at RM154.8 million.

“The higher profit was due mainly to higher contribution from both oleochemical and refining sub-segments with improvement in margins, partly offset by lower share of results from our specialty fats associate, Bunge Loders Croklaan Group B.V.,” said the group.

On its prospects, IOI noted the rally in CPO price this year to above RM5,000 per metric tonne, and said it anticipates the price to remain high until early 2022, supported by the global edible oil supply tightness and good demand as the global economy recovers.

It said its plantation segment might see lower CPO production due to adverse weather and the unresolved labour shortage situation, although the strong CPO price and increased mechanisation in its estates would support the segment’s performance.

The group expects the division to perform well during its current financial year.

Its refinery and commodity marketing sub-segment has been supported by robust demand due to the global economic recovery, coupled with good margins, but the considerable hike in raw material prices in recent times, coupled with persistent high freight costs, pose a huge challenge.

“Nevertheless, we believe that our relentless effort to strive for cost efficiency, enhanced productivity and growth in specialty business will enable the sub-segment to sustain its profitability,” it said.

IOI expects its overall operating performance for the remaining quarters of its financial year to be good.

IOI rose one sen or 0.3% to RM3.77 on Wednesday (Nov 24), giving it a market capitalisation of RM23.7 billion.