IOI Corp Q1 net profit more than doubles

KUALA LUMPUR: IOI Corp Bhd's first quarter net profit ended September 2012 more than doubled to RM604.3 million from a year ago, thanks to stronger contribution from its property development and oleochemical businesses.

In its filing to the stock exchange yesterday, IOI said it posted pre-tax profit of RM730.8 million, 72 per cent higher than RM424.1 million, a year ago.

The increase is due mainly to paper gain of RM259.2 million on foreign currency denominated borrowings and higher contributions from all major segments other than plantation segment.

IOI's oleochemical profits increased to RM73.2 million from RM33.2 million. The group reaped higher profit margins from the product sales of its oleochemical and specialty fats business.

During the quarter, IOI's plantation profit shrank 28 per cent to RM401.2 million from RM557.1 million reported a year ago. The lower profit was due mainly to lower harvest of fresh fruit bunches coupled with lower palm oil prices. Average palm oil price realised in the first quarter amounted to RM2,941 a tonne, compared to RM3,149 a tonne posted a year before.

Like other plantation companies, IOI's oil palm business continues to face challenges on manpower constraints and prevailing lower palm oil prices.

However, in the mid-term, the group expects to perform well with resilient demand from the food sector, price competitiveness over other edible oils.This is mainly fuelled by higher consumption of cooking oil in emerging markets like Asia and Africa. IOI expects palm oil price to recover beginning early 2013.

Two months ago, prices plunged to a low of RM2,255 a tonne. It has since bounced back to trade at around RM2,400. Yesterday, the third month benchmark crude palm oil futures on Bursa Malaysia Derivatives Market added RM30 to close at RM2,459 a tonne.

IOI's property development profit climbed nine per cent to RM111.8 million, thanks to higher share of results from Singapore jointly controlled entities. Back home, its property investment profit jumped 13 per cent to RM15.2 million from RM13.5 million as occupancy rates and rental yields of select real estate improved.