PETALING JAYA: IOI Corp Bhd
is poised for a stronger financial year ending June 2026 (FY26), underpinned by rising fresh fruit bunch (FFB) production, firm crude palm oil (CPO) prices and the benefits of its extensive replanting programme, although analysts remain cautious about persistent challenges in its downstream operations.
Analysts generally view the group’s third-quarter results for the period ended March 31, 2026 (3Q26) as being within expectations, with the plantation segment continuing to drive earnings growth.
According to CIMB Research, IOI expects CPO prices to remain firm at between RM4,300 and RM4,600 per tonne from June to August 2026. At the same time, FFB production is expected to improve as seasonal recovery takes hold and more replanted estates enter their prime productive years.
Since FY19, IOI has replanted 57,482 ha, representing 39% of its planted area in Malaysia. Analysts believe this will continue to support stronger yields and production growth over the medium term.
For the first nine months of FY26 (9M26), IOI recorded core net profit of RM1.15bil, up 23% year-on-year (y-o-y). The earnings accounted for between 72% and 79% of full-year forecasts by various research houses, indicating that the group is on track to meet expectations.
Meanwhile, RHB Research expects plantation earnings to strengthen further in 4Q26, supported by higher output and stronger CPO prices.
“Going into 4Q26, we expect IOI’s upstream earnings to improve on elevated CPO prices and higher output, although profits at its downstream division could moderate,” it said.
BIMB Research also expects stronger earnings momentum in the final quarter, noting that the plantation division remained the key growth engine.
“The main growth contributor remains the upstream plantation segment, supported by higher FFB production as more palms enter their prime age, coupled with firm CPO prices that are likely to remain around RM4,400 per tonne in the near term,” it said.
The plantation segment’s performance was supported by a 9.9% increase in FFB output during 9M26, exceeding both management’s guidance of 5% to 8% growth for FY26 and RHB Research’s forecast of 6%.
Improved yields and better oil extraction rates also helped offset lower realised CPO prices.
The downstream resource-based manufacturing segment continues to face headwinds. While CIMB Research noted improved refining margins and stronger oleochemical earnings, reported results were affected by a RM77mil fair-value loss on derivatives.
Analysts also warned that rising competition from Indonesian producers and softer global demand could continue to pressure margins. Nevertheless, contributions from associates are expected to remain supportive.
BIMB Research expects specialty fats producer Bunge Loders Croklaan to benefit from resilient North American demand following the expansion of its New Orleans facility, while CIMB Research believes additional contributions from the plant could help offset weaker cocoa butter equivalent margins.
An analyst told StarBiz that the upstream division is expected to contribute more than 90% of group operating profit between FY26 and FY28.
The segment is supported by margins exceeding 40% and a relatively low production cost of about RM1,800 to RM2,000 per tonne, making IOI one of the lower-cost producers in the industry.
He believes earnings are likely to remain closely tied to CPO price movements and any sustained recovery in palm oil prices would provide further upside to IOI’s profitability and growth prospects.
