PUTRAJAYA: IOI Corp Bhd will allocate RM1bil for investments in its upstream businesses, according to chief executive officer Datuk Lee Yeow Chor (pic).
“This is to rebalance the company’s investment portfolios, as it had invested substantially in downstream businesses over the past few years,” Lee told reporters after the company’s EGM here yesterday.
Lee said IOI would be actively looking at the plantation sector, depending on the opportunities, as it has a strong balance sheet and a low gearing level of 0.38.
On crude palm oil, Lee, who is also chairman of the Malaysian Palm Oil Council, expected prices to increase to between RM2,500 and RM2,650 per tonne in the next two months, after the winter season.
“Previously, during this period (December/January), there used to be a double-digit drop in production, but this year we expect it to be a single-digit drop.
“This is due to the strengthening ringgit and its correlation with higher crude oil price which has now moved above the US$60 per barrel threshold,” said Lee.
He also projected IOI’s palm oil output to increase by between 8% and 10%, driven by the recovery in the current and new output in Indonesia, which has been moving towards its young prime stage.
On the EGM, Lee said, the group has agreed to dispose of 70% of its stake in its Netherlands-based palm oil refinery, IOI Loders Croklaan Group BV, for RM3.94bil to Koninklijke Bunge BV.
Lee said the disposal would bring down IOI’s net debt and net gearing.
Moving forward, he said, the profit from the company’s upstream businesses would likely continue to account for about 60% to 70% of its total profit, mainly from the plantation sector, while about 25% to 35% would be from its downstream businesses. — Bernama
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