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Kim Loong 1Q net profit down 28% on lower CPO prices

TheEdge Thu, Jun 27, 2019 07:47pm - 7 months ago

KUALA LUMPUR (June 27): Lower palm oil prices pulled down Kim Loong Resources Bhd's net profit by 27.9% for the first financial quarter ended April 30, 2019 (1QFY20).

Net profit fell to RM14.51 million in 1QFY20 from RM20.13 million a year ago. This resulted in a lower earnings per share of 1.55 sen for 1QFY20 compared with 2.16 sen for !qFY19.

Quarterly revenue contracted 28.6% to RM168.97 million, from RM236.49 million in 1QFY19.

In an exchange filing today, Kim Loong attributed the lower revenue and profit at its plantation operations to a 26% drop in average selling price and a marginal 3% drop in fresh fruit bunches (FFB) production.

The plantation operations did not face problem in selling its FFB production as most of the produce was supplied to mills within the group, it added.

As for its palm oil milling operations, despite suffering from drops in crude palm oil (CPO) selling price and quantity, the segment recorded a 9% higher profit due to better processing margin at its Kota Tinggi operations in Johor.

“The market condition and demand for the group’s  milling products has been good and steady for the current quarter and year-to-date,” it said.

As at April 30, 2019, the group’s total planted area was 14,897ha.

On prospects for the financial year ending Jan 31, 2020 (FY20), Kim Loong said it foresees the group will still be able to perform satisfactorily.

“We are of the view that CPO price could be moving higher from the current level of RM2,000 per tonne, considering production trends would be in low yield cycle in the second and third quarters of 2019.”

Despite operational disruptions faced from the reported fire incident at its Kota Tinggi mill, the management is still optimistic that the segment could achieve high utilisation rate of processing capacity in FY20.

Shares in Kim Loong closed unchanged at RM1.15 today for a market capitalisation of RM1.08 billion.

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