KUALA LUMPUR: IOI Corp Bhd said higher palm oil prices boosted its revenue in the first quarter ended Sept 30, but unfavourable currency exchange rates and derivative losses curbed its net profit growth.

The planter expects prices to remain elevated into early 2022, but warned that freak weather pattern and the unresolved labour shortage situation to impact its output.

For the three-month just ended, IOI Corp posted a net profit of RM277.6mil compared with RM277.9mil made a year earlier. Revenue jumped to RM3.6bil from RM2.48bil previously, the plantation giant said in a filing today.

Profit before taxation (PBT) was substantially higher at RM446.8mil in the first quarter (Q1) as compared with RM360.2mil a year ago. This was despite the 15% drop in palm oil production to 746,307 tonnes from 878.701 tonnes, while yield per hectare also declined.

Average CPO selling price was higher at RM4,032 a tonne compared with RM2,579 per tonne a year earlier. CPO prices were traded above RM5,000 tonne in October and November.

"We anticipate the CPO price to remain high until early 2022, supported by the global edible oil supply tightness as well as good demand as the global economy continues to improve," IOI Corp said.

The group's latest quarterly results, however, were impacted by non-operating items.

"Excluding the total net foreign currency translation loss of RM26.3mil on foreign currency denominated borrowings and deposits and net fair value loss on derivative financial instruments of RM134.4 million, the underlying PBT of RM607.5mil for Q1 FY2022 was 78% higher than the underlying PBT of RM341.5mil for Q1 FY2021, due mainly to higher contribution from all segments," it said.

The group's plantation segment profit for Q1 surged 78% to RM487, while its resource-based manufacturing segment reported a 16% increase in profit to RM46.1mil.

"For our plantation segment, the CPO production is expected to be lower than initially anticipated due to the impact from adverse weather arising from the La Nina phenomenon and unresolved labour shortage situation. Nevertheless, with the strong CPO price and the increased mechanisation in our estates, we foresee our plantation segment to perform well during the current financial year," it added.

IOI Corp said its refinery and commodity marketing sub-segment has been enjoying almost two quarters of positive refining and fractionation margins.

"We expect the performance of this sub-segment to be satisfactory due to the positive margins and the strategic location of our refinery complex in Sandakan, Sabah," it said. IOI Corp said that the oleochemical sub-segment has been supported by robust demand due to the global economy recovery coupled with good margins.

"For the specialty fats sub-segment comprising our associate company Bunge Loders Croklaan Group B.V., we expect the sub-segment to perform better in the current financial year, supported by good performance from North American region and new product launches," the group said.

However, unpredictable currency swings are likely to continue to impact its results.

"The US Dollar-Ringgit exchange rate which affects the foreign exchange translation gain/loss arising from our USD-denominated borrowings is expected to remain volatile in the near term," it said.

Despite this, IOI Corp expects its overall operating performance for the remaining periods of the current financial year to be good on the back of strong performance from our plantation segment.