Kim Loong’s 2Q net profit rises 37%, supported by higher palm oil prices
28/09/2022 (The Edge Markets), Kuala Lumpur - Kim Loong Resources Bhd’s net profit grew 37.4% to RM49.67 million for the second quarter ended July 31, 2022 (2QFY23), from RM36.15 million a year earlier, on the back of higher palm oil prices.
Earnings per share increased to 5.14 sen from 3.87 sen, the plantation company’s filing with Bursa Malaysia showed. It was the group's strongest quarterly results since listing.
Quarterly revenue rose 40.8% to RM564.37 million from RM400.83 million in 2QFY22, driven by higher fresh fruit bunches (FFB) and average selling prices of crude palm oil (CPO).
For the first six months of FY23, Kim Loong delivered a 37.8% increase in its net profit to RM88.89 million, compared with RM64.53 in the same period of FY22, as revenue rose 50.6% to RM1.07 billion from RM713.28 million.
“The good performance for the current financial year-to-date was mainly due to higher average selling prices of FFB and CPO by 45% and 49% respectively.
“FFB production for the current year-to-date was marginally lower by 2%, while CPO production had increased by 4% as compared to the corresponding period last year,” the company said.
The Johor-based planter said full-year FFB production could be 10% higher than the quantity achieved in FY22, if the labour shortage problem does not deteriorate further.
“As for palm oil milling operations, the management expects a total processing quantity of about 1.5 million tonnes of FFB for the current financial year, which is close to [FY22],” the company said.
Looking ahead, Kim Loong said it would continue to monitor the impact of volatile CPO pricing on the performance of the group.
“Although the current high production season might cause pressure on CPO price, the management expects the average CPO price for the second half of the financial year 2023 [to] remain above RM3,500 per tonne. We are of view that the group could still benefit from the current level of CPO price, especially the plantation operations,” the company said.
It added that a significant surge in the cost of fertilisers, and higher labour costs as a result of shortage of foreign workers and the revised minimum wages effective May 2022, continue to pose challenges for the group’s operations.
Kim Loong’s shares settled 0.6% or one sen lower at RM1.66 on Wednesday (Sept 28), giving the group a market capitalisation of RM1.61 billion.