KUALA LUMPUR: Plantation company Kuala Lumpur Kepong Bhd (KLK) will continue to be buoyed by strong commodity prices as it focuses on consolidating its assets as well as enhance synergies and operational integration in 2022.
Chairman R.M. Alias said the crude palm oil (CPO) market in 2021 had remained resilient and is expected to bode well for the performance of the group this year.
“Thus, we are hopeful that a repeat of our record performance will occur. Approved capital expenditure will exceed RM1.8bil but likely will stretch out over two years.
“Our focus will be on executing these projects well and managing our costs in an inflationary environment efficiently whilst improving productivity,” he said in the company’s latest annual report.
Additionally, Alias said KLK’s acquisition of IJM Plantations Bhd and P.T. Pinang Witmas Sejati in September and October 2021 respectively, is in line with the group’s strategy to grow through brownfield acquisitions.
“Together, this will increase our group’s planted area to 741,316 acres, which will enhance our economies of scale and greater control of raw materials to supply our downstream facilities.”
Alias said 2022 will not be without headwinds, adding that prioritising environmental, social and governance (ESG) issues is essential for the sustainability of the group’s businesses.
“In our businesses, these headwinds are centred on ESG. They range from climate risks, reducing greenhouse gas, renewable energy to protection of workers’ rights.
"KLK will play its part to embrace policies that preserve biodiversity and conservation, promote the welfare and wellbeing of our employees and foster ethical and responsible behaviour,” he said.
KLK’s net profit surged almost 200% to RM625.80mil for the fourth quarter of its financial year ended Sept 30, 2021 from RM208.82mil in the previous corresponding period, driven mainly by a three-fold increase in profit in the group’s plantation division.
Its revenue in the fourth quarter grew to RM5.93bil from RM4bil a year earlier.
In a filing with Bursa Malaysia on its financial performance, KLK said profits by its plantation division increased to RM585.6mil during the quarter versus RM192.4mil in the previous corresponding period, due to improvement in CPO and palm kernel selling prices.
Additionally, KLK said the improved profit at its plantation division was also due to contributions from its newly acquired subsidiary, IJM Plantations Bhd, as well as better profit gains from processing and trading operations.
For its financial year ended Sept 30, 2021, KLK’s net profit surged to RM2.26bil from RM772.60mil in 2020, while revenue grew to RM19.92bil from RM15.60bil.
Commenting on its prospects, KLK said the performance of its plantation segment for 2022 is expected to be better on the back of strong prevailing CPO prices and profit contribution from the newly acquired plantation subsidiaries.
“Despite challenges from volatile raw material price movements and logistic issues caused by the pandemic, the oleochemical division expects to maintain its performance in 2022,” the company said.