KUALA LUMPUR: Kuala Lumpur Kepong Bhd’s (KLK) net profit fell 80.5% to RM27.89 mil in its second quarter ended March 31, 2020, from RM142.96 mil in the same period last year, dragged down by unrealised foreign currency exchange losses.
Revenue shrank to RM3.8 bil versus RM3.94 bil previously, said the oil palm plantation and oleochemicals manufacturing group.
KLK also declared a first interim dividend of 15 sen per share – same as a year ago – to be paid on Aug 4.
In a filing with Bursa Malaysia today, KLK said the unrealised foreign currency exchange losses totalling RM178.1 mil comprised RM145.3 mil loss from translation of inter-company loans denominated in foreign currencies, and RM32.8 mil loss derived from translation of a US dollar bank loan in an Indonesian subsidiary caused by a drop in the exchange rate of the Indonesian rupiah to the US dollar.
“The bulk of the RM134.5 mil loss was due to depreciation of the rupiah and the ringgit. Amid the Covid-19 crisis, investors flocked to safe haven assets, causing the US dollar to strengthen against emerging market currencies,” it noted.
Excluding the foreign exchange impact, KLK said the group’s pre-tax profit for the quarter under review increased by 43.3% year-on-year (y-o-y) to RM280.7 mil versus RM195.9 mil previously.
On the plantation segment, it said the profit rose 44.4% to RM145.7 mil in 2Q versus RM100.9 mil a year earlier, supported by higher prices of crude palm oil (CPO) and palm kernel (PK).
The price of CPO rose 30.6% y-o-y to RM2,572 per tonne while the PK price increased 18.1% y-o-y to RM1,537 per tonne, it added.
Meanwhile, it said the profit of the segment was also supported by an unrealised gain of RM11.2 mil from changes in fair value on outstanding derivative contracts, but was partially offset by the fresh fruit bunches production which declined 9.8% to 890,872 tonnes and led to a higher CPO production cost.
On the manufacturing segment, KLK said its profit was 4.4% higher at RM97.4 mil in 2Q despite a 13.5% decline in revenue to RM1.98 bil and the recognition of a higher unrealised loss from fair value changes on outstanding derivative contracts of RM17.4 mil.
For the six-month period ended March 31, 2020, the company’s net profit slumped to RM195.09 mil from RM393.87 mil in the same period last year, while cumulative revenue eased to RM7.88 bil from RM8.03 bil previously.
Moving forward, KLK said CPO prices were expected to remain under pressure in the second half of financial year 2020 (FY20) due to economic uncertainties resulting from the Covid-19 pandemic.
“Nevertheless, plantation profit is expected to be satisfactory for the year in view of this segment’s results and CPO prices achieved to date.
“Overall, the group anticipates satisfactory profits for FY20 subject to uncertainties arising from the pandemic,” it added. May 27, 2020, Bernama
