KL Kepong Q3 earnings higher at RM253m

KUALA LUMPUR: Plantations company Kuala Lumpur Kepong (KLK) reported a firmer set of earnings in the third quarter ended June 30, 2016, boosted by higher selling prices for crude palm oil (CPO) and net unrealised foreign exchange (forex) gain.

It said on Wednesday its earnings rose 2.6% to RM253.39mil from RM246.88mil a year ago while earnings per share were 23.80 sen compared with 23.20 sen. Its revenue increased by 10.8% to RM3.92bil from RM3.54bil a year ago.

KLK said that plantations profit rose 13.2% from RM184.9mil to RM209.3mil. The average selling price for CPO rose 17.4% to RM2,496 per tonne from RM2,126 per tonne a year ago while palm kernel prices jumped 40.8% to RM2,136 per tonne from RM1,517.

“Higher returns from refining and kernel crushing operations. Net unrealised foreign exchange gain of RM25mil (3QFY2015: net gain RM2.8mil) which arose from the translation of inter-company loans advanced and bank borrowings to Indonesian companies,” it said. 

Its manufacturing sector reported a 72.3% increase in profit to RM103.3mil from RM60mil as revenue increased by 22.0% to RM1.947bil from RM1.596bil. 

“Most operating entities registered improvement in sales volume particularly Europe and China operations. However, the increasing cost of raw materials, especially CPKO, had squeezed profit margins of the Malaysian entities,” it said. 

KLK said the oleochemical division's profit surged 74.8% to RM99.5mil from RM56.9mil and the profit from the other manufacturing units improved 26.9% to RM3.8mil from RM3.1mil.
Its properties sector's profit fell 33.9% to RM5.1mil from RM7.8mil. Revenue fell 16.5% to RM24.2mil from RM29mil due to the slowdown in the property market. 

This quarter's result had included a lower dividend income of RM21.9mil  from an overseas investment, Synthomer plc. Compared with RM53.4mil a year ago.

KLK also reported the third quarter pre-tax profit of RM314.3mil was 29.4% above the second quarter's RM242.9mil. Revenue rose 5.9% to RM3.922bil from RM3.703bil.

For the nine months ended June 30, 2016, KLK's earnings jumped 78% to RM1.22bil from RM683.62mil in the previous corresponding period, aided by the recognition of a surplus of RM485.6 million derived from the sale of plantation land to an associate. Revenue increased to RM11.96bil from RM9.72bil.

Plantations profit rose 3.9% to RM607.8mil due to higher contributions from processing operations despite lower profit from estate operations. 

Manufacturing sector's profit rose more than two-fold to RM329.4mil on the back of a 23.2% increase in revenue to RM5.568bil. The oleochemical division contributed a significantly higher profit of RM310.7mil and the other manufacturing units had achieved a much higher profit of RM18.7mil.

The properties sector's profit was sharply lower at RM9.4mil versus RM50.5mil a year ago due to reduced revenue of RM50.1mil when compared with RM101.6mil a year ago due to slow sales.  

As for the outlook, KLK said the current palm oil prices remained resilient on account of low stock levels due to the drought hit production. With the anticipated recovery of fresh fruit bunches crop production in the coming months, production cost may decline. 

“Taking these factors into consideration, the plantations profit is expected to be satisfactory for the current financial year,” it said. 
It said the oleochemical business continues to be challenging under difficult market conditions with margins being pressured especially those CPKO-based products. 

However, it said the oleochemical division expected to achieve favourable results due to additional capacity from the plants, which had been expanded, coming fully on-stream together. This would be boosted by higher operational efficiency and improvement in productivity.

Corporate News , Plantations , palm oil , oil palm