KLK’s net profit up 6.6% in 1Q on lower expenses


Kuala Lumpur Kepong Bhd’s (KLK) net profit for the first quarter ended Dec 31, 2018 (1QFY19), increased 6.61% year-on-year (YoY) to RM250.92 million as a result of lower operating and tax expenses.

In an exchange filing yesterday, the group said its profit had accounted a foreign-exchange gain of RM38 million which arose from the translation of inter-company loans denominated in foreign currencies, and surplus of RM22.5 million arising from government acquisition of plantation land.

Nonetheless, the group’s profit before taxation decreased 5.6% YoY to RM336.4 million and revenue fell 21.1% to RM4.09 billion in the three months.

KLK’s plantation profit declined sharply by 58% to RM127.5 million in 1QFY19, following the drop in crude palm oil (CPO) and palm kernel (PK) selling prices.

The decrease was posted despite the 7.9% improvement in fresh fruit bunches production to 1,105,465 metric tonnes.

Profit for KLK’s manufacturing segment fell 28.8% to RM98 million, with revenue lower by 12.4% at RM2.21 billion as a result of a decrease in selling prices.

Decline in profits from its China and European operations had more than offset the improvement in profits from its Malaysian operations.

The oleochemical division’s profit was lower at RM94.5 million, but profit from other manufacturing units increased to RM3.5 million.

However, the group’s property segment achieved a much higher profit of RM11.1 million supported by the increase in revenue to RM39.8 million.

KLK’s farming sector’s profit was substantially higher at RM56.5 million due to the increase in crop production as a result of better yields and larger cropped area.

“Prevailing CPO prices had since recovered from the low levels in the preceding quarter. Should such recovery be sustained, we are optimistic that the prospects for plantation profit for the financial year 2019 (FY19) will be satisfactory.

“The oleochemical division is anticipated to sustain its performance through increasing capacity utilisation and improvement in margins. Overall, the group expects a reasonably satisfactory profit for FY19,” KLK noted.

KLK closed six sen or 0.24% lower at RM24.74 with a market capitalisation of RM26.35 billion.