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KLK to gain substantially from higher commodity prices

KLK to gain substantially from higher commodity prices

19 Aug 2021

Kuala Lumpur Kepong Bhd (KLK) expects its profit for financial year 2021 (FY21) to improve significantly, underpinned by positive results from its property development, manufacturing and plantation segments.

The group’s earnings skyrocketed 112.62% year-on-year (YoY) to RM783.94 million for the third quarter ended June 30, 2021 (3Q21), from RM368.7 million previously.

KLK posted earnings per share of 72.7 sen. Revenue for the quarter rose 39.38% to RM5.17 billion from RM3.71 billion 3Q20.

In a bourse filing yesterday, the group’s plantation segment reported a substantially higher profit of RM432.6 million driven by higher crude palm oil (CPO) and palm kernel (PK) selling prices.

The increase in profit was partially offset by the higher cost of CPO production arising from a 4.5% drop in fresh fruit bunches (FFB) production to 968,440 million metric tonnes and lower profit contribution from the processing and trading operations.

Its manufacturing segment’s profit surged 93.9% to RM207.5 million supported by a 35.2% increase in revenue to RM2.827 billion. The sharp rise in profit was contributed by much better performance from Malaysia, China and Europe operations.

The group’s oleochemical division’s profit had doubled at RM207.8 million while other manufacturing units had posted a loss of RM303,000.

KLK’s property development profit increased significantly to RM15.4 million attributed to a sharp improvement in revenue to RM33.4 million, while the investment holding/others segment reported a slightly higher loss of RM24.5 million largely due to lower interest income caused by reduction in bank deposit rates.

On its current year prospect, KLK said its year-to-date (YTD) profit was boosted by non-operational gains derived from a fair value surplus of RM324.3 million on deemed disposal of an associate, Aura Muhibah Sdn Bhd and surplus of RM158.4 million from sales of land and government acquisitions.

Its plantation profit for FY21 will be significantly higher as CPO and PK selling prices are much better compared to the last financial year.

YTD, KLK’s oleochemical division has performed well and is expected to sustain its performance in the fourth quarter despite a challenging market environment. Nonetheless, its profit is expected to be higher than the previous financial year.

Source: The Malaysian Reserve

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