Kuala Lumpur Kepong Bhd executive chairman Tan Sri Lee Oi Hian.
PETALING JAYA: In 2024, the palm oil sector benefited from strong crude palm oil (CPO) prices, on the back of supply constraints and the upcoming Indonesian biodiesel mandate despite ample soybean stocks.
Though CPO prices moved to the height of RM5,000 per tonne, it was not without uncertainties due to rising inflation, supply chain disruptions and fluctuating commodity prices.
Kuala Lumpur Kepong Bhd
(KLK) executive chairman Tan Sri Lee Oi Hian said to add on to that, unpredictable weather patterns and shifting trade conditions continued to affect the broader market landscape.
“As we look back on the year, we took the opportunity to refine our vision, which is to be a globally recognised and trusted agri-based organisation known for operational efficiency and strong values,” he said in the group’s 2024 annual report.
He added the plantation segment remained a key driver to the group’s performance.
This was thanks to higher CPO and palm kernel prices, improved fresh fruit bunches (FFB) yields and effective cost management, while its property division also recorded a 5% hike in revenue to RM229.4mil.
Its manufacturing segment, however, underwent challenges.
This was largely due to margin pressure in the midstream refinery sub-segment, resulting from overcapacity in the refining industry and the unexpected rise in CPO prices.
According to Lee, there were non-recurring losses in certain units that impacted the group’s overall results, but it has taken proactive steps to address these challenges.
“As we address areas where challenges remain, we remain confident in our ability to navigate the evolving landscape and build on our core strengths for long-term growth,” he said.
For the financial year ended Sept 30, 2024 (FY24), KLK posted a lower profit of RM591mil compared to RM834.3mil in FY23.
The decline was due to tax losses that were not recognised, as well as exceptional losses that included RM315.7mil from its investment in Synthomer plc.
There was also an inventory writedown of RM50.8mil from KLK Hardwood Flooring Sdn Bhd.
On its expansion, Lee said the group acquired a 92% stake in PT Satu Sembilan Delapan from its major shareholder, Batu Kawan Bhd.
“This acquisition is expected to provide a reliable source of feedstock for KLK’s upcoming refinery and oleochemical complex in East Kalimantan due to its proximity,” he noted.
Additionally, its wholly-owned subsidiary KLK Land Sdn Bhd acquired the remaining 40% stake in Aura Muhibah Sdn Bhd (AMSB), giving KLK full ownership of AMSB.
“The acquisition aligns with KLK’s strategy to enhance its property portfolio and capitalise on the potential of the Johor property market,” Lee said.
Meanwhile, Lee who is the chairman of KLK’s parent company Batu Kawan said for FY24, revenue declined 6% year-on-year to RM23.06bil from reduced sales in the refineries and kernel crushing sub-segments.
It recorded a lower pre-tax profit of RM1.24bil compared to RM1.28bil a year ago mainly due to a lower contribution of its manufacturing segment.
Moving on, Lee said the group will expect a stronger performance in the plantation segment for the financial year 2025, supported by stronger CPO prices.
“For the manufacturing segment, we expect better results from the oleochemical sub-segment, while the industrial chemical sub-segment is likely to remain challenging in the financial year 2025 due to ongoing price competition,” he said.
It also completed the replacements of older electrolysers at its three chlor-alkali plants with newer models which will utilise lower electricity, a major production cost component.
The board maintained the final single-tier dividend at 40 sen per share in addition to the interim dividend of 20 sen paid out in August 2024, bringing total dividend payout to 60 sen.
