IOI Corp’s Q4 net profit plunges 93.13% amid segment challenges

IOI Corp Bhd reported a significant decline in net profit in the fourth quarter ended June 30, 2023 (4Q23), dropping by 93.13% to RM37.2 million from RM541.8 million in the corresponding period last year.

The dip in earnings was primarily attributed to reduced contributions from the company’s plantation and resource-based manufacturing segments.

Additionally, a substantial increase in net foreign currency translation loss on foreign currency-denominated borrowings further impacted profits.

Its earnings per share witnessed a considerable drop from 8.72 sen in Q422 to 0.6 sen.

The company’s revenues also contracted by 47.86%, totaling RM1.95 billion, down from RM3.74 billion.

IOI Corp declared a second interim dividend of 5 sen per share, compared to 8 sen in the same quarter of the previous year. Its year-to-date dividend for FY2023 stands at 11 sen, down from FY2022’s 14 sen.

IOI Corp plantation segment reported a 50% decline in profit, reaching RM250.1 million in 4QFY2023.

This was attributed to lower prices of crude palm oil (CPO) and palm kernel (PK), coupled with increased production costs.

The average CPO price realised decreased from RM5,260 per tonne to RM3,906 per tonne, while the PK price decreased from RM3,850 per tonne to RM2,099 per tonne.

The resource-based manufacturing segment also witnessed an 83.8% drop in profit, falling to RM47.4 million, primarily due to a decrease in fair value gain on derivative financial instruments.

Despite the challenging environment, IOI Corp remains optimistic.

It foresees CPO prices to remain within the range of RM3,500 to RM4,000 per tonne in the short term.

The company anticipates a rise in prices later due to a predicted reduction in palm fruit production resulting from the El Nino weather phenomenon.

IOI Corp said it is strategically positioned to face industry challenges and capitalise on opportunities.

Its efficient operations and outlook for cost savings are expected to contribute to a positive financial performance in the coming periods.

IOI Corp’s share price concluded the trading session today with a decrease of 1 sen, representing a decline of 0.25%, to settle at RM4.05. This resulted in the company’s market capitalisation amounting to RM25.46 billion. – TMR / pic TMR FILE