PETALING JAYA: Kuala Lumpur Kepong Bhd (KLK) expects weaker palm oil prices, supply chain disruptions and inflationary pressures from higher priced fuels, fertilisers and agrochemicals to impact its plantation and manufacturing segments in the fourth quarter (4Q) after posting strong 3Q financial results.
KLK’s revenue for 3Q ended June 30, 2022 rose to RM6.96bil from RM5.17bil in 3Q of financial year 2021 (FY21) on higher contribution from its plantation business which enjoyed higher prices for its crude palm oil (CPO) and palm kernel (PK) oil.
Net profit for the period dipped 29% year-on-year (y-o-y) to RM558.3mil or an earnings per share (EPS) of 51.8 sen primarily due to 3Q of FY21 having factored in gains on disposal of an associate company, Aura Muhibah Sdn Bhd.
“Excluding the above non-operational gains, the group’s current quarter pre-tax profit would be 20.4% higher at RM753.7mil compared with RM626.1mil in 3Q of FY21, supported by the increase in revenue,” KLK said in a filing with Bursa Malaysia yesterday.
The group’s plantation segment reported a substantial increase in profit to RM594.3mil in the quarter as compared with RM402.9mil in 3Q of FY21 driven by higher CPO and PK prices, profit contribution from recently acquired subsidiaries and a higher unrealised gain of RM86.7mil from fair value changes on outstanding derivative contracts.
It is to note that the unrealised gain in 3Q of FY21 stood significantly lower at RM18.7mil.
“This segment’s profit was partially offset by higher CPO production cost and fair value loss of RM56.4mil on a valuation of unharvested fresh fruit bunches,” the group said.
KLK’s manufacturing segment saw net profit slipping 11.9% y-o-y to RM208.9mil in the quarter despite a 33.4% increase in revenue to RM5.86bil.
“The higher profit contribution from the oleochemical division was partially offset by losses from refineries and kernel crushing operations and a higher unrealised loss of RM33.7mil from fair value changes on outstanding derivative contracts,” the group added.
For the nine-month period, revenue surged to RM20.17bil versus RM13.98bil in the nine-month period of FY21, while net profit increased 4% y-o-y to RM1.7bil or an EPS of 158 sen.
KLK said profits from its plantation segment will sustain despite CPO and PK prices easing following an increase of 41% and 40.9% to RM4,857 and RM3,364 per tonne respectively in 3Q of FY22.
Its manufacturing segment’s performance will be satisfactory, supported by its ability to consistently deliver high-quality and sustainably produced ingredients in a tight supply environment.
“Overall, the group expects to deliver a favourable set of results for FY22,” KLK said.
Batu Kawan Bhd, which holds a 47.73%-stake in KLK, posted a higher revenue of RM7.25bil in the 3Q period compared with RM5.4bil in 3Q of FY21. Its net profit fell to RM304.3mil for the period versus RM386.47mil in 3Q of FY21.
Batu Kawan’s nine-month revenue and net profit surged 44.3% y-o-y and 13.4% y-o-y to RM21bil and RM951.56mil, respectively, driven by higher palm product prices.
KLK closed 2.4% higher at RM23 per share yesterday, while Batu Kawan’s shares were up marginally by 0.33% to RM23.98 per share.