PETALING JAYA: IOI Corp Bhd expects its operating and financial performance for the remaining quarters of its current financial year ending June 30, 2024 (FY24) to be satisfactory.
In a filing with Bursa Malaysia, the group said it expects crude palm oil price (CPO) to remain range-bound between RM3,750 to RM4,050 per tonne in the next two months, before moving higher.
It said this is as the anticipated monsoon rains in Malaysia during December 2023 and January 2024 may disrupt palm fruits harvesting and cause a drop in palm oil stock over the first quarter of 2024.
For its first quarter ended Sept 30, 2023, IOI Corp’s net profit jumped to RM304mil from RM167.5mil.
Excluding the non-operating and one-off items, IOI Corp said its underlying pre-tax profit of RM360.9mil during the quarter under review was 45% lower than the underlying pre-tax profit of RM656mil in the previous corresponding period, due mainly to lower contribution from all segments.
Revenue in the first quarter was lower at RM2.2bil, compared with RM3.67bil a year earlier, Basic earnings per share stood at 4.90 sen versus 2.70 sen previously.
Looking ahead, IOI Corp said it anticipates a moderate increase in fresh fruit bunches production for FY24 compared to FY23, despite the ongoing accelerated replanting programme in Sabah.
“The growth is expected to be driven primarily by sufficient workers in Peninsular Malaysia and higher production from the young palm trees in our Indonesian and Peninsular plantations.
“Concurrently, production cost is expected to be lower due to the higher palm fruits yield and decline in fertiliser as well as diesel costs compared to FY23. We continue to hold a positive outlook on the financial performance of the plantation segment for the remaining financial quarters.”
Concerning its refinery and commodity marketing sub-segment, IOI Corp said it expects the current low or negative refining margins to remain.
“This is largely due to stiff competition from Indonesian refiners who benefit from their country’s CPO export duty policy. Nevertheless, our refineries’ efficient cost structure and capability in producing low oil blends will give us a competitive advantage in the challenging operating environment.”
Additionally, IOI Corp said the outlook for its oleochemical sub-segment remains subdued, in light of the weak global economic environment and rising geopolitical tensions that undermined global trade.
“In response to these challenges, our focus on cost control and plant efficiency is vital.
“Our new fatty acid and soap noodle plants have reduced our production cost and at the same time give us the flexibility to tailor our products to meet customer requirements.”
The group added that the dollar-ringgit exchange rate, which affects the foreign exchange translation gain/ loss arising from its dollar-denominated borrowings, will be volatile with the uncertainties in US Federal Reserve’s monetary policy and new conflict in the Middle East region.