Kuala Lumpur Kepong Berhad’s (KLK) net profit for its first quarter ended 31 December 2020 more than doubled to RM357.41mil from RM167.20mil in the previous corresponding period. This was mainly due to higher earnings from its plantation, manufacturing and property development divisions.
In a filing with Bursa Malaysia, the group said revenue in the first quarter rose to RM4.30bil from RM4.08bil a year earlier.
KLK said profits for its plantation division surged 83.3% to RM288.9mil in the first quarter of its current financial year, driven by improvements in crude palm oil (CPO) prices and palm kernel (PK) selling prices by 22.5% and 37.6%, respectively, on a year-on-year basis.
“However, the increase in profit was partially offset by a decrease in CPO sales volume, as well as higher unrealised loss of RM39mil from changes in fair value of outstanding derivative contracts.”
Meanwhile, profit from KLK’s manufacturing division rose sharply by 67.2% to RM133.7mil, underpinned by a 21.5% increase in revenue to RM2.34bil.
“The improvement in profit was largely contributed by China and Europe operations, coupled with unrealised gain from fair value changes on outstanding derivative contracts of RM14.5mil. Profit from the oleochemical division was 66.9% higher at RM129.2mil and profit from the other manufacturing units had improved to RM4.5mil.”
Separately, KLK said profit from its property division climbed 62.2% to RM22mil, adding however that revenue was only slightly higher at RM53.4mil, compared with RM52.2mil in the previous corresponding quarter.
“This was due to recognition of profit from projects with better margins, ” it said.
Additionally, KLK said the RM22.2mil profit from its investment holdings and other division was achieved through its farming sector, which posted a substantial rise in profit to RM47.1mil, underpinned by improved yields and higher cropped area.
“However, net interest expense had increased due to reduction in deposit rates, ” it said.
KLK also registered an increase to RM27mil in corporate income during the quarter under review, which was largely attributable to higher foreign currency exchange gain of RM41.1mil on translation of intercompany loans denominated in foreign currencies.
On its prospects for the remainder of the current financial year, KLK said plantation profit will improve in 2021 in view of the current buoyant CPO and PK prices.
“Performance of the oleochemical division has so far been satisfactory but is expected to be challenging. Overall, the group’s profit for the financial year 2021 will be higher, ” it said.
The group also did not issue any profit forecast or profit guarantee during the current financial year-to-date.
“For the first quarter ended 31 December 2020, there have been no significant changes to the group’s exposure to credit risk, market risk and liquidity risk from the previous financial year.
“Since the previous financial year, there have been no changes to the group’s risk management objectives, policies and processes, ” it said.
from The Star, 18 February 2021