PETALING JAYA: Stronger commodity prices, bolstered by a sharp jump in oleochemical manufacturing and property development revenues, lifted Kuala Lumpur Kepong Bhd’s (KLK) net profit by more than double in the third quarter (Q3) ended June 30.
A fair value surplus of RM324.3mil derived from the deemed disposal of an associate, Aura Muhibah Sdn Bhd, also helped KLK to achieve the strongest quarterly net profit in 22 quarters.
The plantation giant reported yesterday that its net profit for Q3 of financial year 2021 (FY21) came in at RM783.94mil, as compared to RM368.7mil in the same quarter a year earlier. Revenue in the three-month period rose 39.4% year-on-year (y-o-y) to RM5.17bil from RM3.71bil a year earlier.
KLK said its plantation segment registered a higher profit, driven by higher crude palm oil (CPO) and palm kernel (PK) selling prices in Q3 of FY21. CPO prices rose 53.8% y-o-y, while PK prices surged 81.4% y-o-y.
However, the increase in profit was partially offset by a higher cost of CPO production, as well as a lower profit contribution from the processing and trading operations.
As for the manufacturing segment, the bottom line witnessed a sharp improvement, thanks to stronger contributions from the operations in Malaysia, China and Europe.
Nevertheless, the stronger profitability only came from oleochemical manufacturing, while the other manufacturing units reported losses in the third quarter.
Meanwhile, the property development segment’s earnings also increased on the back of stronger revenue. KLK’s earnings per share in Q3 of FY21 was at 72.7 sen as compared to 34.2 sen a year earlier. The group did not declare a dividend for the quarter.
Cumulatively, in the first nine months of FY21, KLK’s net profit surged by over 189% y-o-y to RM1.63bil from RM563.79mil in the previous corresponding period.
Revenue in the nine-month period improved by 20.6% y-o-y to RM13.98bil.
KLK witnessed a stronger bottom line across its plantation, manufacturing and property development segments.
However, the group’s investment holding segment reported losses in the nine-month period. This was due to a higher net interest expense and lower share of profit from an overseas associate, Synthomer Plc, which had more than offset the higher profit posted by the farming business.
In a filing with the stock exchange yesterday, KLK said its year-to-date profit was boosted by non-operational gains derived from a fair value surplus of RM324.3mil on the deemed disposal of an associate, Aura Muhibah, and a surplus of RM158.4mil from the sale of land and government acquisitions.
“Plantation profit for FY21 will be significantly higher as CPO and PK selling prices are much better compared to the last financial year.
“Year-to-date, the oleochemical division has performed well and is expected to sustain its performance in Q4 despite a challenging market environment. For FY21, this division’s profit is expected to be higher than the previous financial year,” it said.
Looking ahead, KLK was positive that its overall profit for FY21 will improve substantially.