MARKET DEVELOPMENT
IOI Profit Tumbles in Q2
IOI Profit Tumbles in Q2
21/02/2017 (The Star) - IOI Corp Bhd registered a sharp decline in earnings for the last three months of 2016, as the decline in the value of the ringgit resulted in foreign currency translation losses.
The plantation giant saw its net profit fall 97.8% to RM15.6mil for the second quarter of its financial year ending June 30, 2017 (Q2’17), compared with RM703.7mil in the corresponding quarter last year.
Consequently, the group’s earnings per share fell to 0.25 sen from 11.17 sen previously.
This was despite the group registering a revenue growth of 23.5% to RM3.67bil from RM2.97bil previously.
IOI has proposed a first interim dividend of 4.50 sen per share.
In its filings, IOI said its pre-tax profit fell to RM128.8mil in Q2’17 from RM844.2mil in Q2’16.
“The lower pre-tax profit is due mainly to the net foreign currency translation loss on foreign currency-denominated borrowings of RM330mil for Q2’17 as compared to the gain of RM227.3mil reported in Q2’16,” IOI said.
Excluding the net foreign currency translation loss/gain, IOI’s underlying pre-tax profit of RM458.8mil for Q2’17 was 26% lower than the RM616.9mil registered for Q2’16.
“The lower underlying pre-tax profit is due mainly to a lower contribution from the resource-based manufacturing segment, which was partially cushioned by higher contribution from the plantation segment,” IOI explained.
During the quarter in review, the group’s plantation profit increased 23% to RM357.9mil from RM292.1mil in Q2’16.
The higher profit reported was due mainly to the higher crude palm oil (CPO) and palm kernel (PK) prices realised despite lower fresh fruit bunch production.
The average CPO price realised for Q2’17 stood at RM2,768 per tonne, compared with RM2,144 per tonne in Q2’16, while the average PK price realised for Q2’17 stood at RM2,882 per tonne, compared with RM1,631 per tonne previously.
IOI’s resource-based manufacturing segment, on the other hand, reported a profit of RM155.4mil for Q2’17, compared with RM368.6mil for Q2’16.
“Excluding the fair value loss/gain on derivative financial instruments, the underlying profit for the resource-based manufacturing segment of RM178.8mil for Q2’17 is 59% higher than the underlying profit of RM112.2mil for Q2’16.
“This is mainly due to the higher margin derived from the refining sub-segment,” IOI said.
For the cumulative two quarters, IOI reported a net profit of RM120.4mil, compared with a net loss of RM40.7mil for the six months to December 2015.
The plantation giant saw its net profit fall 97.8% to RM15.6mil for the second quarter of its financial year ending June 30, 2017 (Q2’17), compared with RM703.7mil in the corresponding quarter last year.
Consequently, the group’s earnings per share fell to 0.25 sen from 11.17 sen previously.
This was despite the group registering a revenue growth of 23.5% to RM3.67bil from RM2.97bil previously.
IOI has proposed a first interim dividend of 4.50 sen per share.
In its filings, IOI said its pre-tax profit fell to RM128.8mil in Q2’17 from RM844.2mil in Q2’16.
“The lower pre-tax profit is due mainly to the net foreign currency translation loss on foreign currency-denominated borrowings of RM330mil for Q2’17 as compared to the gain of RM227.3mil reported in Q2’16,” IOI said.
Excluding the net foreign currency translation loss/gain, IOI’s underlying pre-tax profit of RM458.8mil for Q2’17 was 26% lower than the RM616.9mil registered for Q2’16.
“The lower underlying pre-tax profit is due mainly to a lower contribution from the resource-based manufacturing segment, which was partially cushioned by higher contribution from the plantation segment,” IOI explained.
During the quarter in review, the group’s plantation profit increased 23% to RM357.9mil from RM292.1mil in Q2’16.
The higher profit reported was due mainly to the higher crude palm oil (CPO) and palm kernel (PK) prices realised despite lower fresh fruit bunch production.
The average CPO price realised for Q2’17 stood at RM2,768 per tonne, compared with RM2,144 per tonne in Q2’16, while the average PK price realised for Q2’17 stood at RM2,882 per tonne, compared with RM1,631 per tonne previously.
IOI’s resource-based manufacturing segment, on the other hand, reported a profit of RM155.4mil for Q2’17, compared with RM368.6mil for Q2’16.
“Excluding the fair value loss/gain on derivative financial instruments, the underlying profit for the resource-based manufacturing segment of RM178.8mil for Q2’17 is 59% higher than the underlying profit of RM112.2mil for Q2’16.
“This is mainly due to the higher margin derived from the refining sub-segment,” IOI said.
For the cumulative two quarters, IOI reported a net profit of RM120.4mil, compared with a net loss of RM40.7mil for the six months to December 2015.