26/08/2022 (The Edge Markets) - Oriental Holdings Bhd’s net profit for the second quarter ended June 30, 2022 (2QFY22) jumped by nearly four times to RM136.81 million or 22.05 sen per share from RM34.93 million or 5.63 sen per share a year ago, on higher share profit of its associates.

The group's share of profit after tax of equity accounted associates ballooned to RM21.48 million from RM115,000, its bourse filings showed.

The better quarterly performance was also lifted by foreign currency exchange gains of RM6.71 million against a loss of RM8.02 million in 2QFY21. 

Quarterly revenue rose 23.08% to RM939.18 million from RM763.1 million the year before.

The group has proposed a dividend of 20 sen per share. This will bring its year-to-date dividend payout to 30 sen per share, 16 sen higher than what it paid last year.

For the cumulative six-month period ended June 30, Oriental's net profit more than doubled to RM404.65 million from RM156.98 million a year earlier. Revenue increased 13.65% to RM1.88 billion from RM1.65 billion.

Oriental said the improved six-month profitability was mainly due to higher contributions from hotels and resorts and plantation segments.

The increase in revenue, meanwhile, was attributed to higher contribution from the plantation, investment properties and trading of building material products segments, on overall increase in crude palm oil prices (CPO) and palm kernel selling prices and higher sales volume from building material products respectively.

On prospects, the group said its automotive segment will continue to contribute to its performance under very competitive market conditions with strong and aggressive promotional campaigns by the industry players.

However, it warned that shortage of vital components such as semiconductor chips continues to be a concern for certain models as the war in Ukraine continues to put a strain on supplies of important parts needed.

Turning to its plastic segment, Oriental said the segment continues to face competition from other industry players and disruptions in the global supply chain and limited growth in the local automotive industry. Hence, management will continue to exercise cost rationalisation, productivity improvement and source for new business ventures to improve the performance of the segment.

For the plantation segment, despite the removal of Indonesia’s three-week CPO export ban, Oeiental noted that Indonesia's exports have not reverted to normal levels as Jakarta required companies to sell a portion of output at home before issuing export permits, in a bid to control local cooking oil prices. This has led to a surge in stocks and a slump in prices.

As a result, the plantation segment will take necessary steps to ensure that all estates and mills remain efficient, cost-effective and competitive.

For the hotels and resorts segment, Oriental said that with the accelerating vaccination programmes and greater immunity, the segment will make a comeback following several countries lifting their international travel restrictions and opening to vaccinated travellers.

The group said the healthcare segment will continue to focus on strengthening brand awareness and positioning the hospital for sustainable growth.

Shares in Oriental Holdings closed up seven sen or 1.05% at RM6.72, giving the group a market capitalisation of RM4.17 billion.