KLK issues profit warning amid weak palm oil prices

KUALA LUMPUR: Plantation group Kuala Lumpur Kepong Bhd (KLK), which saw its net profit fall 26.8% to RM214.2mil in the first quarter ended Dec 31, 2014, expects profit from its palm oil business for the current financial year ending Sept 30 (FY15), to be lower than that of last financial year on weaker prices.

“The current palm oil price is buoyed by the weak ringgit and tight supply. However, the palm oil price will be affected by the current high soybean production,” it said.

In addition, KLK said the current low petroleum price had affected the fatty alcohol and surfactant businesses of its oleochemical division.

“Overall, the group expects a satisfactory profit for the current financial year albeit lower than that of the previous financial year,” KLK told Bursa Malaysia yesterday.

In the first quarter, KLK’s revenue rose 24.9% to RM3.11bil compared with RM2.49bil a year ago while its earnings per share fell to 20.1 sen for the quarter versus 27.5 sen previously.

Its plantations profit dropped 5.7% to RM242.1mil in the first quarter due mainly to weaker selling prices of crude palm oil (CPO) and rubber, reduced crop productions of both fresh fruit bunches (FFB) and rubber and higher production cost of CPO.

However, the recognition of an unrealised gain of RM26.3mil arising from the changes in fair value on outstanding derivative contracts had mitigated the decline in profit.

Its manufacturing segment recorded a profit of RM29.5mil, a 63.1% drop from RM80mil in the previous corresponding period.

Even though revenue was 11.8% higher at RM1.41bil, the results of this sector were affected by the negative margins from the fatty alcohol and surfactant businesses. The low petroleum price had made synthetic alcohol very competitive and destabilised fatty alcohol price.

The oleochemical division’s profit dropped 61.3% to RM28.8mil while and the other manufacturing units reported a lower profit of RM706,000.

Palm Oil , Plantations , Corporate News , KLK