MARKET DEVELOPMENT
KLK Plantation Profit Surges in Q1 on Higher Palm Oil Price
KLK Plantation Profit Surges in Q1 on Higher Palm Oil Price
15/02/2017 (The Star) - Kuala Lumpur Kepong Bhd (KLK) reported a 54% surge in its plantation pre-tax profit to RM419.4mil, thanks to improved selling prices for crude palm oil (CPO) and palm kernel (PK) for its first quarter ended Dec 31, 2016 (Q1’17).
The plantation group’s Q1’17 total net profit amounted to RM360.68mil on the back of RM5.5bil in revenue.
While the net profit was a decline from the RM795.21mil reported a year ago, the Q1’16 figure included a RM485.7mil surplus from the sale of plantation land to an associate. KLK’s revenue during the previous corresponding quarter was at RM4.34bil.
In its earnings disclosure, KLK noted that the 54% increase in its plantation operation’s pre-tax profit was driven by the improved CPO and PK prices despite the increase in the cost of production for CPO and lower contributions from processing operations.
Additionally, the group benefitted from a higher net unrealised foreign exchange gain of RM44.4mil, which arose from the translation of inter-company loans advanced and bank borrowings to Indonesian companies.
Its average selling price for CPO during Q1’17 was RM2,720 per tonne from RM1,972 per tonne a year ago. PK selling prices similarly rose to RM2,648 per tonne from RM1,437 per tonne previously.
Meanwhile, profit for its manufacturing segment declined 80.3% to RM24.7mil from RM125.9mil a year ago despite a 30% improvement in revenue to RM2.33bil from RM1.79bil previously.
The decline was attributable to the unrealised loss of RM29mil arising from the fair value changes on outstanding derivative contracts, which had affected the results of the segment.
On its future outlook, KLK said the current bullish sentiment on CPO prices was underpinned by low inventories and weak ringgit.
“Going forward, fresh fruit bunch production is expected to recover with an increase in palm oil stocks and this may ease off the CPO price.
“Nevertheless, with forward sales committed into the second quarter, we anticipate a favourable plantation profit for the current financial year,” it said.
In December, KLK’s offer to take over United Kingdom-listed MP Evans Group Plc for RM2.3bil was rebuffed by the latter’s shareholders. The group did not raise its initial offer price of 740 pence per MP Evans share and subsequently backed out of the deal.
KLK is set to hold its AGM in Ipoh, Perak, today.
The plantation group’s Q1’17 total net profit amounted to RM360.68mil on the back of RM5.5bil in revenue.
While the net profit was a decline from the RM795.21mil reported a year ago, the Q1’16 figure included a RM485.7mil surplus from the sale of plantation land to an associate. KLK’s revenue during the previous corresponding quarter was at RM4.34bil.
In its earnings disclosure, KLK noted that the 54% increase in its plantation operation’s pre-tax profit was driven by the improved CPO and PK prices despite the increase in the cost of production for CPO and lower contributions from processing operations.
Additionally, the group benefitted from a higher net unrealised foreign exchange gain of RM44.4mil, which arose from the translation of inter-company loans advanced and bank borrowings to Indonesian companies.
Its average selling price for CPO during Q1’17 was RM2,720 per tonne from RM1,972 per tonne a year ago. PK selling prices similarly rose to RM2,648 per tonne from RM1,437 per tonne previously.
Meanwhile, profit for its manufacturing segment declined 80.3% to RM24.7mil from RM125.9mil a year ago despite a 30% improvement in revenue to RM2.33bil from RM1.79bil previously.
The decline was attributable to the unrealised loss of RM29mil arising from the fair value changes on outstanding derivative contracts, which had affected the results of the segment.
On its future outlook, KLK said the current bullish sentiment on CPO prices was underpinned by low inventories and weak ringgit.
“Going forward, fresh fruit bunch production is expected to recover with an increase in palm oil stocks and this may ease off the CPO price.
“Nevertheless, with forward sales committed into the second quarter, we anticipate a favourable plantation profit for the current financial year,” it said.
In December, KLK’s offer to take over United Kingdom-listed MP Evans Group Plc for RM2.3bil was rebuffed by the latter’s shareholders. The group did not raise its initial offer price of 740 pence per MP Evans share and subsequently backed out of the deal.
KLK is set to hold its AGM in Ipoh, Perak, today.