IOI Corp Posts Flat Net Profit Growth in 3QFY22; Revenue Jumps 43%
20/05/2022The Edge Markets

(File pic by IOI Corporation).

KUALA LUMPUR (May 20): IOI Corp Bhd registered a flat growth of RM411.2 million in its net profit for the third quarter ended March 31, 2022 (3QFY22), compared with RM401.3 million in the same quarter last year.

Earnings per share increased to 6.62 sen from 6.40 sen previously, the company’s filing with Bursa Malaysia on Friday (May 20) showed.

This came despite higher revenue of RM4.1 billion for the quarter, increasing 43% compared to RM2.86 billion in a year ago as the group saw higher contribution from its plantation segment.

Looking at the financial statements of the company, the flat net profit was a result of higher taxation recorded for the quarter, amounting to RM159.5 million compared to RM73.2 million a year ago.

The company attributed the higher effective tax rate for the quarter to Cukai Makmur, losses from tax exempt entity and non-deductible expenses offset against non-taxable income.

IOI Corp said its plantation segment’s profit in 3QFY22 of RM518.5 million was 179% higher than the RM185.9 million in 3QFY21 on higher crude palm oil (CPO) and palm kernel (PK) prices realised, as well as higher fresh fruit bunch (FFB) production and higher share of associate results from Bumitama Agri Ltd (BAL).

“Average CPO and PK prices realised for 3QFY22 were RM5,064/MT (3QFY21 — RM3,211/MT) and RM4,588/MT (3QFY21 — RM2,616/MT) respectively,” it said.

The group’s resource-based manufacturing segment profit for 3QFY22 is RM45.8 million, as compared to RM442.2 million for 3QFY21.

“Excluding the fair value loss on derivative financial instruments of RM17.4 million (3QFY21 — gain of RM43.4 million) and share of Loders’s one-off gain of sales of its refinery of RM267.9 million reported in 3QFY21, the resource-based manufacturing segment reported an underlying profit of RM63.2 million for 3QFY22, which was 52% lower than the underlying profit of RM130.9 million for 3QFY21.

“The lower profit was due mainly to lower share of associate results from Loders and lower sales volume and margins from its refining sub-segment which was mitigated by higher contribution from oleochemical sub-segment,” said IOI Corp.

For the six months ended March 31 (6MFY22), the company’s net profit rose 14.36% to RM1.18 billion from RM1.03 billion, while 6MFY22 revenue jumped 51.98% to RM11.84 billion from RM7.79 billion.

Overall, IOI Corp said it expects its financial performance for 4QFY22 to be good, on the back of strong performance from the plantation segment and the oleochemical sub-segment.

“For our plantation segment, CPO production is expected to increase in 4QFY22, in line with the seasonal trend. With the anticipated strong CPO price, we expect the plantation segment to perform well in 4QFY22.

“Palm refining and fractionation margins have turned positive due to the high CPO export duty, as well as good demand for palm oil as a substitute for sunflower oil. We expect the performance of our refinery and commodity marketing sub-segment to be satisfactory due to the positive margins, as well as the efficient business model of our refinery in Sabah,” it said.

As for its oleochemical sub-segment, elevated raw material price and high energy cost continue to pose challenges to the sub-segment, according to the group.

Nevertheless, due to the tightness of product availability in the market, the company anticipates that the oleochemical sub-segment’s margins will still remain healthy and enable the sub-segment to sustain its good performance.

“For 4QFY22, we expect the performance of the specialty fats sub-segment comprising our associate company Bunge Loders Croklaan (BLC) to be satisfactory, as it benefits from favourable demand and BLC’s supply chain capability, although the operating environment presents challenges such as high energy cost and the pandemic-related lockdown in parts of China.

The US dollar has strengthened considerably against the ringgit, which has resulted in forex translation loss from our USD-denominated borrowings. The US dollar is anticipated to remain strong in the near term due to the aggressive US Federal Funds rate hikes this year,” it added.

IOI Corp shares closed up one sen or 0.23% at RM4.40 on Friday, giving it a market capitalisation of RM27.65 billion.