PETALING JAYA: Kuala Lumpur Kepong Bhd
(KLK) expects its plantation segment to remain the backbone of the group’s financial results, going forward.
With the anticipated recovery of the manufacturing segment, KLK said in a filing with Bursa Malaysia that it is cautiously optimistic about its financial prospects for the current financial year.
For its first quarter ended Dec 31, 2023, KLK’s net profit dropped to RM226.94mil from RM443.04mil, while revenue dipped to RM5.64bil from RM6.71bil a year earlier.
Basic earnings per share stood at 21.00 sen versus 41.10 sen previously.
KLK said the weaker performance was due to lower revenue for its manufacturing division, as well as losses sustained for its investment holding division.
“Manufacturing profit fell sharply by 90.1% to RM25.3mil with revenue declining by 18.9% to RM4.48bil.
“The decline in profit was mainly attributable to loss incurred by the oleochemical division, which was impacted by eroded profit margin.”
KLK said it also saw lower profit contributions from its refineries and kernel crushing operations.
Additionally, KLK said its investment holding segment reported a loss of RM39.4mil, mainly caused by lower profit from the farming sector of RM7.6mil, which was attributable to decline in sales volume of crops due to adverse weather conditions that affected crop production.
Despite the dissipation of the El-Nino premium and lower demand, KLK said concerns about low palm production next quarter and tightening stocks during Ramadan season may likely keep prices above RM3,800 per tonne.
“The group remains focused on improving the yields via implementation of site-specific strategies to overcome main yield limitations in certain regions.”
The group said its oleochemical sub-segment reported weak results with a loss of approximately RM9.3mil amid sluggish demand, high interest rate environment and ongoing geopolitical tensions impacting global trade.
“The group experienced marginal increase in sales volume in the reporting quarter with eroded margins. The group sees stronger demand in Europe and South-East Asia for the second quarter of financial year 2024.
“The performance of each plant will be closely monitored, focusing on the operations that are underperforming to optimise both utilisation and cost to enhance profitability.”
Meanwhile, parent company Batu Kawan Bhd’s net profit for the first quarter ended Dec 31, 2023, dropped to RM111.74mil from RM235.30mil in the previous corresponding period, while revenue dipped to RM5.8bil from RM6.99bil a year earlier.
Basic earnings per share stood at 28.40 sen compared with 59.80 sen previously.
