KUALA LUMPUR: Kuala Lumpur Kepong Bhd (KLK) reported a 658% surge in its net profit to RM368.7 million for the third quarter ended June 30, 2020 (3QFY20), from RM48.62 million in the previous year’s corresponding quarter, due to forex gains.

Revenue for the quarter was slightly higher at RM3.71 billion from RM3.7 billion in the previous year. The significant increase in profit was attributed to forex gains totalling RM199.3 million during the quarter, said KLK in its filing with the bourse.

The forex gains comprised RM171.9 million derived from translation of intercompany loans denominated in foreign currencies as a result of the appreciation of the rupiah against the ringgit and US dollar, as well as another RM27.4 million gain on translation of a US dollar-denominated bank loan in an Indonesian subsidiary. On top of the forex gain, the group said its profit in 3QFY19 was arrived at after the recognition of RM145.3 million provision for impairment of an estate in Liberia.

“Excluding the above items, the pre-tax profit of the group for the current quarter rose 79.3% to RM287.8 million,” it said.

Segmentally, KLK said its plantation operations recorded a substantially higher profit of RM229.4 million due to improved crude palm oil (CPO) and palm kernel selling prices. The segment also saw an increase in fresh fruit bunch production by 5.8% to 1.014 million tonnes, higher sales volume of CPO and higher contributions from processing and trading operations. For the nine months to June 30, KLK’s net profit rose 27.4% to RM563.79 million from RM442.49 million in the previous year, while revenue contracted 1.2% to RM11.59 billion from RM11.73 billion.

The group’s manufacturing segment also saw growth of 8.1% to RM107 million, helped by unrealised profit of RM20.4 million due to changes in fair value of outstanding derivative contracts. The property development business saw profit falling 36.8% to RM7 million, with a sharp decline in revenue to RM15.1 million, while its investment holding/others segment saw a loss of RM22.6 million.

Despite the uncertainties brought about by the Covid-19 pandemic, KLK expects to see improvement in its profit for the current financial year.

“CPO prices have improved, underpinned by declining palm oil inventories and recovery in demand with the reopening of global economies. In the light of improvement in CPO prices together with the results achieved to date, plantation profit is anticipated to be higher for the current financial year 2020,” said the group.

KLK’s share price rose two sen or 0.09% to close at RM22.60, giving a market capitalisation of RM24.43 billion.

 

from The Edge Markets, 19 August 2020