IOI Corp expects fresh fruit bunch production to grow moderately in FY25.
PETALING JAYA: IOI Corp Bhd
, whose net profit more than doubled in the first quarter ended Sept 30, 2024 (1Q25), expects a “satisfactory” performance for the remaining quarters of its financial year 2025 (FY25), supported by higher crude palm oil (CPO) prices and improving yields.
In a filing with Bursa Malaysia, the group noted that CPO prices surged above RM5,000 per tonne in early November 2024.
This increase was attributed to higher demand in October from importing countries, as Europe prepared for the implementation of the European Union Deforestation Regulation and China’s economic stimulus measures boosted its edible oil imports.
“With that backdrop, we forecast CPO price to remain high at above RM4,500 per tonne during the next three months, supported by tighter palm oil supplies as we head towards the low crop season.
“However, concerns over lower demand due to high price coupled with the current CPO price premium over soybean oil price will exert some downward pressure on this high CPO price,” the company said.
On its plantation segment, IOI Corp expects fresh fruit bunch production to grow moderately in FY25, driven by yield improvements in Peninsular Malaysia and contributions from maturing young palms in Sabah and Indonesia.
The company’s accelerated replanting programme in Sabah will continue but is not expected to significantly impact overall growth.
“Combined with the higher CPO price, we maintain a positive outlook on the plantation segment’s financial performance for the remaining periods of FY25,” it added.
Meanwhile, the group noted that refining margins in its refinery and commodity marketing sub-segment have improved following the Malaysian government’s decision to raise the CPO export tax effective Nov 1, 2024.
However, it cautioned that relatively high refined product prices might affect demand in the coming months.
In 1Q25, IOI Corp’s revenue rose 21% to RM2.67bil from RM2.2bil in the previous corresponding quarter.
Net profit for the quarter under review more than doubled to RM710.7mil compared to RM304mil in 1Q25.
The group noted that after excluding non-operating items, the underlying profit before tax (PBT) for 1Q25 increased 4% to RM359.1mil from RM344.4mil in 1Q24.
This was mainly attributed to higher contributions from the plantation segment, partially offset by lower contributions from the resource-based manufacturing segment.
As for its plantation segment, IOI Corp reported a profit contribution of RM370mil for 1Q25, a 12% increase from RM330.8mil in 1Q24.
The group said that excluding the fair value gain on biological assets and derivative financial instruments of RM16.9mil in 1Q25 (1Q24: RM16.3mil), the plantation segment recorded an underlying profit of RM353.1mil, representing a 12% increase from RM314.5mil in 1Q24.
This improvement was attributed to higher realised CPO and palm kernel (PK) prices, as well as increased FFB production of 760,000 tonnes compared to 730,000 tonnes in the same period last year.
However, the growth was partially offset by a lower share of associates’ results, which fell to RM52.3mil from RM85.7mil in 1Q24.
IOI Corp noted that the average CPO price realised for 1Q25 was RM4,059 per tonne compared to RM3,789 per tonne in 1Q24, while the average PK price was RM2,699 per tonne, up from RM2,100 per tonne in 1Q24.
Meanwhile, in its resource-based manufacturing segment, profit contribution rose to RM107.9mil for 1Q25, up from RM57.7mil in 1Q24.
However, excluding the fair value gain on derivative financial instruments of RM70.3mil (1Q24: RM1.3 million), the segment reported an underlying profit of RM37.6mil for 1Q25, which was 33% lower than the underlying profit of RM56.4mil for 1Q24.
IOI Corp said this decline was largely due to lower sales volumes and margins in the refining sub-segment, mitigated by improved sales volumes and margins in the oleochemical sub-segment and higher share of associates’ results.
