KUALA LUMPUR: IOI Corporation posted net profit of RM748.4mil in the third quarter ended March 31, 2016, underpinned by higher contribution from resource-based manufacturing segment and net foreign currency translation gain on borrowings.

The plantation heavyweight said on Wednesday this was in contrast with the net losses of RM188mil a year ago. However, the third quarter performance reflected the steady improvement from the second quarter ended Dec 31, 2015 when it posted earnings of RM724.80mil.

IOI Corp said profit before taxation (PBT) in the just ended quarter was RM869.4mil versus loss before taxation of RM109.2mil a year ago.

“Excluding the net foreign currency translation gain of RM432.8mil (Q3 FY2015 – loss of RM332.7 million) on foreign currency denominated borrowings, the underlying PBT of RM436.6 million for Q3 FY2016 is 95% higher than the underlying PBT of RM223.5 million for Q3 FY2015,” it explained.

In Q3, FY16, plantation profit fell 13% to RM166.3mil from a year ago due mainly to lower fresh fruit bunches (FFB) production which was mitigated by higher crude palm oil (CPO) and palm kernel (PK) prices realised. FFB production for Q3 FF16 fell 23% to 525,281 tonnes from 683,718 tonnes a year ago.

It reported a 196% increase in resource-based manufacturing profit of RM305.1mil from RM102.9mil a year ago.

IOI Corp attributed the higher profit due mainly to fair value gain on derivative financial instruments of RM184.9mil (Q3 FY15 – RM4.2mil).

If the fair value gain on derivative financial instruments was excluded, the underlying profit for resource-based manufacturing also showed a 22% increase to RM120.2mil from the underlying profit of RM98.7mil a year ago.

“This is mainly due to higher contribution from the oleochemicals and the specialty oils and fats sub-segments,” it said.

When compared with the second quarter ended Dec 31, 2015, its PBT was lower at RM869.4mil from RM876.5mil due to lower contribution from all segments.

However, this was mitigated by higher net foreign currency translation gain on foreign currency denominated borrowings.

“Excluding the net foreign currency translation gain of RM432.8mil (Q2, FY16 – RM227.3mil) on foreign currency denominated borrowings, the underlying PBT of RM436.6mil for Q3, FY16 is 33% lower than the underlying PBT of RM649.2mil for Q2, FY16,” it said.

IOI Corp said plantation profit fell 48% to RM166.3mil for Q3 FY16 from RM324.4mil for Q2, FY16 mainly due to lower FFB production but this was offset by higher CPO and PK prices realised.

“FFB production for Q3 FY2016 was 525,281 tonnes as compared to 934,940 tonnes for Q2 FY16,” it said.

The resource-based manufacturing profit of RM305.1mil in Q3 FY16 was lower than profit of RM368.6mil in Q2 FY16.

“The lower profit is due mainly to lower fair value gain on derivative financial instruments of RM184.9mil (Q2 FY2016 – RM256.4mil). Excluding the fair value gain on derivative financial instruments, the underlying profit for resource-based manufacturing of RM120.2 million for Q3 FY16 is 7% higher than the underlying profit of RM112.2 million for Q2 FY2016.

“This is mainly due to higher contribution from the oleochemicals and the specialty oils and fats sub-segments,” it said.

For the nine months ended March 31, 2016, its earnings jumped to RM754.20mil from RM8.20mil. Revenue rose to RM8.92bil from RM8.61bil.