PETALING JAYA: Plantation group IOI Corp Bhd’s third-quarter net profit to end-March plunged 88.1% to RM245.8mil from RM2.1bil a year ago, on the absence of disposal gains during the period.

During the corresponding quarter a year ago, the group had recognised a disposal gain of RM1.6bil from the divestment of a 70% equity interest in resource-based manufacturing business Loders Croklaan Group B.V.

The group said the reduced net profit was also due to lower net foreign currency translation gains on its foreign currency-denominated borrowings and deposits, and as a result of the revision in real property gains tax.

Revenue for the period, however, increased 8.6% to RM1.9bil.

In a filing with Bursa Malaysia, the group said profit from the plantation segment of RM132.6mil was 44% lower, mainly due to lower crude palm oil (CPO) and palm kernel prices realised.

Underlying profit from its resource-based manufacturing segment, meanwhile, was 144% higher year-on-year, excluding the fair value gain/loss on derivative financial instruments.

The higher profit, the group said, was due mainly to improved sales volume and margins from the refining sub-segment, as well as a share of associate results from Loders.

For the nine-month period, net profit fell 80.7% to RM585.1mil from RM3bil previously.

Moving forward, the group said CPO price is expected to remain weak due to ample supply of soy bean and high palm oil stocks.

“The higher biodiesel mandates in Malaysia and Indonesia would help to ease the palm oil stockpile, albeit at a gradual pace,” it said.

For its plantation segment, the group said fresh fruit bunch production is expected to be slightly lower in the fourth quarter compared to the third quarter due to the change in the seasonality of Malaysian production pattern, and lower harvesting productivity during Ramadan.

“Coupled with the weak palm oil price, the plantation segment is expected to perform below average in the fourth quarter of financial year 2019,” it said.

In the resource-based manufacturing segment, it expects the oleochemical sub-segment to continue to perform well in the fourth quarter on the back of good demand for its products and lower raw material prices.

The group added that its 30%-owned specialty fats associate company, Bunge Loders Croklaan, is anticipated to continue to perform well during the final quarter.