KL Kepong Q2 earnings down 24% to RM168m

KUALA LUMPUR: Kuala Lumpur Kepong Bhd (KL Kepong) reported a 24.2% fall in its earnings to RM168.53mil in the second quarter ended March 31, 2016 as it was impacted by net unrealised foreign exchange loss and weaker property sales. 

The company said on Monday the decline in earnings from RM222.54mil a year ago was due to forex loss of RM35.8mil in the plantations segment compared with net gain of RM210,000 a year ago.

KL Kepong said the forex loss arose from the translation of loans advanced and bank borrowings to Indonesian companies. However, the reduction in profit was mitigated by the improved performance from the processing operations. 

Its Q2 pre-tax profit fell 18.1% to RM242.9mil from RM296.5mil a year ago despite higher revenue. Its revenue increased by 20.7% to RM3.70bil from RM3.06bil a year ago. Earnings per share were 15.8 sen compared with 20.9 sen a year ago. It declared an interim dividend of 15 sen a year ago.

It said plantations profit for Q2 fell 20.5% to RM125.6mil from RM157.9mil as it was significantly impacted by the net unrealised forex loss of RM35.8mil.

As for its manufacturing sector,  profit rose 61% to RM100.2mil from RM62.3mil. This was on the back of a 21.7% increase in revenue to RM1.83bil from RM1.507bil. 

“Europe and China operations contributed to the improved profit through better sales volume. However, the increasing cost of raw materials had narrowed profit margins, especially the Malaysian entities.” it said.
 
Profit from the oleochemical division rose 66.9% to RM94.3mil from RM56.5mil while the profit from the other manufacturing units was flat at RM5.9mil. 

Also impacted were the properties sector, where its profit fell 82.9% to RM5mil from RM28.9mil. Revenue fell 63.3% to RM15.6mil from RM42.7mil due to the slowdown in the property market. 

For the first half, KL Kepong reported a 120% increase in earnings at RM963.74mil from RM436.74mil in the previous corresponding period. Revenue rose to RM8.04bil from RM6.18bil.