IOI Corp sees CPO prices at RM3,700-4,100 per tonne for next three months


KUALA LUMPUR: IOI Corp Bhd expects crude palm oil (CPO) price to hover within the range of RM3,700 to RM4,100 per tonne during the next three months.

The plantation group noted that CPO prices experienced significant fluctuations in recent months.

“Looking ahead, we project an increase in CPO production due to seasonal trends. This increase coupled with the expected good soybean harvest in South America may pose challenges for CPO prices.

“However, the anticipated replenishment of palm oil stock by importing countries with low inventories will support CPO price,” IOI Corp said in a filing with Bursa Malaysia.

In the third quarter ended March 31, IOI’s net profit fell 37.6% to RM123.1mil, or earnings per share of 1.98 sen compared with RM197.4mil, or 3.18 sen in the same quarter last year.

Revenue fell to RM2.46bil against RM2.66bil achieved a year ago.

For the first three nine months to March 31, the group posted a net profit of RM762.5mil on revenue of RM7.06bil.

On its plantation segment, IOI said fresh fruit bunches (FFB) production is expected to increase in the fourth quarter (3Q) of the financial year ending June 30, 2024 (FY24) compared to Q324 following the seasonal production cycle.

“Coupled with the continuing labour productivity improvement and higher oil extraction rate due to better FFB quality, we expect the plantation segment to perform well in 4Q24,” it said.

IOI anticipates the ongoing low or negative refining margins to persist in its refinery and commodity marketing sub-segment.

It noted that the overcapacity of refineries in Indonesia and the raw material price advantage from their country’s CPO export duty policy are largely the causes for these low or negative refining margins.

“The performance of our oleochemical sub-segment is largely dependent on the global economic and trade growth. With ongoing uncertainties surrounding the global economy and geopolitical tensions affecting global trade, we anticipate that our oleochemical sub-segment’s performance will face continued challenges,” the group said.

IOI stated that the financial performance of its specialty fats sub-segment, which includes the associate company Bunge Loders Croklaan (BLC), remains robust despite global economic fluctuations due to the resilient demand for food products.

The group also noted that the US dollar-ringgit exchange rate, impacting foreign exchange translation gains or losses from its US dollar-denominated borrowings, is expected to experience volatility in the last quarter of FY2024.

It said this volatility is primarily driven by ongoing geopolitical tensions and uncertainties surrounding the US Fed's monetary policy.

“Overall, the group expects its operating and financial performance for 4Q24 to be satisfactory,” IOI said.

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