Strong CPO prices see revenue surging 80% to RM4.56bil

19/08/2008 (The Star Online), Petaling Jaya - IOI Corp Bhd posted an impressive 42% jump in pre-tax profit to RM856mil for its fourth quarter ended June 30 against RM602mil a year ago, backed by overall strong crude palm oil (CPO) prices, good earnings from the manufacturing of oleochemicals and property business.

Revenue rose 80% to RM4.56bil from RM2.54bil previously.

For the financial year ended June 30 (FY08), its net profit jumped 51% to RM2.23bil from RM1.48bil in FY07. Revenue surged 64% to RM14.67bil from RM8.95bil previously.

An analyst with KAF-Seagroatt & Campbell Securities said the IOI group was able to leverage on its diversified base and was not too dependent on one business, particularly palm oil, to drive growth and earnings.

“IOI has definitely performed much better than many of its peers because of its diversified earnings stream,” he told StarBiz.

Going forward, he said the company should continue to perform well, despite a possibility of CPO prices falling further in the coming months.

The analyst said CPO prices were currently hovering around the RM2,500 per tonne and could go either way for sometime.

“However, we believe most players including IOI Corp would make decent profits if CPO prices average around RM3,000 per tonne for the next two years,” he said.

He said IOI Corp’s diversified upstream and downstream manufacturing activities in oleochemicals, specialty oils and fats, palm oil refinery and palm kernel crushing made the group more resilient.

IOI Corp declared a fourth quarter dividend of 10 sen per share, bringing the total dividend to 17 sen for FY08.

IOI Properties Bhd, meanwhile, posted 11.8% increase in revenue to RM787.9mil compared with RM704.8milFY07.

Its pre-tax profit, however, slipped to RM550.2mil from RM555.2mil previously.

The analyst said while the property sector was expected to remain soft for some time, IOI Properties was able to ride the tough times and rising cost of raw materials because it was buffered by cheaper land cost for development.