KUALA LUMPUR: IOI Corp Bhd’s net profit for its second quarter ended Dec 31, 2021 rose nearly 40% to RM494.70mil from RM355.70mil in the previous corresponding period, driven by higher contribution from the group’s plantation and resourced-based manufacturing divisions.

       Revenue in the second quarter grew to RM4.11bil from RM2.45bil a year earlier.

       In a filing with Bursa Malaysia yesterday, IOI Corp said profit for its plantation segment surged 69% year-on-year (y-o-y) to RM576mil during the second quarter ended Dec 31, 2021, mainly due to higher crude palm oil (CPO) and palm kernel (PK) prices.

       “Average CPO and PK prices realised for the second quarter were RM4,565 per tonne and RM3,678 per tonne, respectively.”

       Separately, IOI Corp said resource-based manufacturing segment’s profit for the second quarter ended Dec 31, 2021 rose to RM152.8mil from RM21.2mil in the previous corresponding period.

       “Excluding the fair value gain on derivative financial instruments of RM54.5mil and share of associate company, Bunge Loders Croklaan’s (Loders) impairment loss of RM55.3mil, the resource-based manufacturing segment reported an underlying profit of RM153.6mil for the second quarter ended Dec 31, 2021, compared with RM111.8mil a year earlier.

       “The improved profit was due mainly to higher contribution from the oleochemical sub-segment, with improvement in margins offset by lower contribution from the refining sub-segment.”

       For the six-month period ended Dec 31, 2021, IOI Corp’s net profit increased to RM772.30mil from RM633.60mil in the previous corresponding period, while revenue improved to RM7.74bil from RM4.93bil a year earlier.

       IOI Corp said its plantation division reported a profit of RM1.06bil during the six-month period, which was a y-o-y increase of 73% from the RM613.9mil reported previously.

       “The higher profit reported was due mainly to higher CPO and PK prices realised, partly offset by lower fresh fruit bunches (FBB) production.”

       Average CPO and PK prices realised for the six-month period ended Dec 31, 2021 were RM4,305 per tonne and RM3,112 per tonne, respectively, it said.

       Additionally, IOI Corp said the resource-based manufacturing segment’s profit for the six-month period ended Dec 31, 2021 increased to RM198.9mil from RM60.8mil a year earlier.

       Excluding the fair value loss on derivative financial instruments of RM54.2mil and share of Loders’ impairment loss of RM55.3mil, the group said its resource-based manufacturing segment reported an underlying profit of RM308.4mil for the six-month period ended Dec 31, 2021, compared with RM201.2mil in the previous corresponding period.

       “The improved profit was due mainly to higher contributions from the oleochemical sub-segment with improvement in margins.”

       IOI Corp also declared a first interim single-tier dividend of six sen per ordinary share, to be paid on March 25, 2022.

       On its prospects, the group noted that CPO prices had risen in February 2022 and had been trending close to the RM6,000-per-tonne mark following the news of India’s import duty cut as well as Indonesia’s new palm oil export restriction rules.

       “We anticipate the CPO price to remain strong until at least the middle of this year, supported by the global edible oil supply tightness as well as growth in the global economy as we transition from the Covid pandemic to the endemic phase.”

       For its plantation segment, IOI Corp said the FFB production for the remaining period of 2022 is expected to be impacted by seasonal effects, labour shortage as well as other operational disruptions due to the recent Omicron outbreak.

       “Nevertheless, with the strong palm oil price and intensified mechanisation initiatives in our estates, the plantation segment is expected to perform well during the rest of the current financial year.”

       IOI Corp said the palm refining and kernel crushing margins in Malaysia continue to be affected by the high CPO and kernel prices as well as the export duty regulations in Indonesia.

       “However, we expect the performance of our refinery and commodity marketing sub-segment to remain resilient due to our efficient business model in respect of the Sabah refinery.”

       For the oleochemical sub-segment, IOI Corp said its product margins are expected to be affected by the sharp rise in PK oil feedstock price from December 2021.

       Nevertheless, it said pent-up demand for its products remain strong due to the earlier supply chain bottlenecks, which is in line with the growth in the global economy.

       “We expect this sub-segment to perform satisfactorily for the remaining periods of 2022.”

       For the remainder of its current financial year, IOI Corp said it foresees an improvement in the operating performance of the specialty fats sub-segment, which comprises its associate company Loders.

       Despite the continued growth in the global economy, IOI Corp said the operating environment still presented challenges such as high freight cost and rising energy cost.

       “The dollar to ringgit exchange rate, which affects the foreign exchange translation gain/loss arising from our dollar-denominated borrowings is expected to remain volatile.

       “Overall, the group expects its performance during the remaining period of 2022 to be good on the back of a strong performance from our plantation segment.”