(File pic by IOI Corporation).

KUALA LUMPUR (Feb 28): IOI Corp Bhd's net profit rose 43.95% to RM712.1 million for the second quarter ended Dec 31, 2022 (2QFY2023), from RM494.7 million a year earlier, boosted by higher earnings contribution from its resource-based manufacturing segment. Earnings per share rose to 11.47 sen from 7.95 sen.

The resource-based manufacturing segment's profit more than trebled to RM464.3 million from RM152.8 million in 2QFY2022, thanks mainly to a higher contribution from the refining sub-segment with improvement in margins, said the group in a Bursa Malaysia filing.

IOI Corp also recognised a higher foreign currency translation gain on borrowings of RM122.4 million from RM29 million previously.

The group declared a first interim dividend of six sen per share, payable on March 24.

Quarterly revenue, however, declined 19.66% to RM3.3 billion, from RM4.11 billion in 2QFY2022 on lower contribution from the plantation segment due to higher cost of production, lower crude palm oil and palm kernel prices, and decrease in share of associate results.

For the first six months of FY2023, IOI Corp’s net profit rose 13.89% to RM879.6 million, from RM772.3 million in the previous corresponding period, although revenue decreased 9.97% to RM6.97 billion from RM7.74 billion.

Looking ahead, IOI Corp expects fresh fruit bunch production in its plantation segment to increase in FY2023 with the improved labour conditions, mechanisation effort as well as higher crop trend from younger palms.

“For our refinery and commodity marketing sub-segment, refining and fractionation margins have turned negative in recent months. We expect margins to improve with the suspension of export permits by the Indonesian government,” the group said.

Meanwhile, IOI Corp said the operating condition for the oleochemical sub-segment continues to be challenging with persistent inflationary pressure coupled with the slowdown in global demand, which is mitigated by the improved uptake from China with the easing of its zero-Covid policy.

“For the specialty fats sub-segment comprising our associate company, Bunge Loders Croklaan, satisfactory performance is expected for the remaining period of FY2023 with good performance from [the] North American region and improved performance from Asia Pacific region. The group continues to benefit from its innovative product offerings and the synergies with Bunge’s other product offerings.

“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 for the remaining period of FY2023,” it added.

IOI Corp's share price closed 1.06% higher at RM3.83 on Tuesday (Feb 28), valuing the group at RM24.07 billion.