KLK’s 1Q net profit jumps 67.7% on higher CPO, kernel prices

Its quarterly revenue also grew 58.84% to RM6.8b from RM4.3b a year earlier 

by S BIRRUNTHA / Pic by TMR GRAPHIC

KUALA Lumpur Kepong Bhd’s (KLK) net profit for the first quarter ended Dec 31, 2021 (1Q22), rose 67.68% to RM599.32 million from RM357.41 million a year ago, as the group registered higher revenue. 

Its quarterly revenue also grew 58.84% to RM6.83 billion from RM4.3 billion a year earlier, the oil palm plantation group’s filing to Bursa Malaysia yesterday showed. 

KLK registered an earnings per share of 55.6 sen for the period against 33.1 sen in 1Q21. 

The group did not recommend any dividend for the quarter and the total dividend for the current financial year-to-date is nil. 

On a segmental basis, KLK said its plantation segment profit more than doubled to RM607.9 million from RM239 million a year ago, boosted by significantly higher crude palm oil (CPO) and palm kernel (PK) selling prices, as well as profit contribution from newly acquired subsidiaries. 

However, it noted that the increase in plantation profit was partially offset by higher unrealised loss of RM28.7 million compared to RM24.4 million in 1Q21 from fair value changes on outstanding derivative contracts. 

The group’s manufacturing segment reported 74.0% improvement in profit to RM319.6 million compared to RM183.7 million in 1Q21, on the back of 55.7% increase in revenue to RM5.51 billion from RM3.54 billion previously. 

“Oleochemical division’s profit was 86.2% higher at RM240.7 million from RM129.2 million in 1Q21. Improvement in profit was contributed by better performance from all regions. 

“Profit from refineries and kernel crushing operations surged 58.5% to RM79.1 million from RM49.9 million in 1Q21, while other manufacturing units posted a loss of RM211,000 from RM4.5 million a year ago,” it added. 

KLK also noted that effective from Oct 1, 2021, refineries and kernel crushing operations are classified from plantation to manufacturing segment to better reflect the performance of the upstream business. 

Meanwhile, the group’s property segment profit fell 14.5% to RM18.8 million from RM22 million in 1Q21 despite higher revenue of RM56 million from RM53.4 million previously. 

KLK said this was attributed to recognition of profit from projects with lower margins. 

For its investment holding and others segment, profit improved marginally to RM23.9 million from RM22.2 million in 1Q21 which was mainly contributed by better profit from farming sector of RM59.7 million from RM47.1 million previously, as a result of higher revenue from higher average selling price of all crops. However, KLK noted that net interest expense increased mainly attributable to higher interest expense on increased bank borrowings.

The group’s corporate segment registered an expense of RM15.1 million from an income of RM27 million in 1Q21 largely attributable to foreign currency exchange loss of RM3.5 million from RM41.1 million previously, on translation of inter-company loans denominated in foreign currencies. 

On prospects, KLK said plantation profit for the financial year 2022 (FY22) is expected to be better, supported by buoyant CPO and PK prices and profit contribution from newly acquired subsidiaries. 

It added that despite a challenging operating environment posed by volatility of raw material prices and intense competition, performance of the manufacturing division is projected to be satisfactory for FY22. 

Overall, the group anticipates a good financial performance for FY22. 

Shares of KLK closed eight sen or 0.31% higher to RM25.60 yesterday, valuing the group at RM27.67 billion.