Kim Loong foresee the average CPO price for FY24 to stay over the RM4,000 per tonne level.
PETALING JAYA: Kim Loong Resources Bhd
’s financial performance for the second quarter ended July 31, 2023 (2Q24) and the first half was impacted by the sharp decline in average selling prices of fresh fruit bunch (FFB) and crude palm oil (CPO), despite seeing an increase in production levels.
In a filing with Bursa Malaysia, Kim Loong stated the average selling prices of both FFB and palm oil had decreased by 36% and 35% respectively year-to-date (y-t-d) in its current financial year (FY24).
It noted FFB production y-t-d was higher by 25% year-on-year (y-o-y) while CPO production experienced a marginal decrease.
For the 2Q24, Kim Loong reported a net profit of RM43.35mil, a 13% year-on-year (y-o-y) drop from the RM49.67mil earnings it posted in 2Q23.
Similarly, topline dropped by about 32% y-o-y to RM385.61mil for the quarter under review due to lower pricing power.
For the first half of FY24 (1H24), Kim Loong’s revenue stood at about RM712.29mil, a 34% y-o-y decrease while its bottomline dipped by about 16% y-o-y to RM74.87mil. Kim Loong anticipates FFB production for FY24 (ending Jan 31, 2024) to increase by 15% compared to the quantity achieved in FY23.
The increase will be due to more replanted areas maturing and the improved age profile of the productive areas with young palm trees. As of July 31, the group’s total planted area, excluding land designated for infrastructure, unplantable land, and areas under development, stood at 15,940 ha.
Year-to-date, the group has completed replanting activities on 49 ha of land, the plantation company noted in its filing.
Kim Loong expects its palm oil milling operations to achieve a total processing throughput of 1.5 million tonnes of FFB for the current financial year.
“The management expects our biogas plant at Keningau (Sabah) which has commenced supply of power to the grid since December 2022, to contribute positively to revenue as well as profit in FY24. On the other hand, our biogas plant at Telupid is expected to commence operations by the end of FY24,” the company added.
Although price of CPO has been volatile, Kim Loong foresee the average CPO price for FY24 to stay over the RM4,000 per tonne-level.
“The plantation industry outlook remains challenging given the commodity price volatilities, labour shortages, inflationary pressures on cost, persisting weather extremities and biofuel policy changes,” Kim Loong said.
All in, Kim Loong expects a satisfactory performance for FY24.
