KUALA LUMPUR: Kuala Lumpur Kepong Bhd's (KLK) net profit plunged 84.9 per cent to RM84.1 million for the third quarter ended June 30, 2023 (3Q23) from RM558.27 million a year ago, dragged by lower revenue.
Revenue fell 26.5 per cent to RM5.11 billion from RM6.96 billion previously.
As a result, the group registered a lower earnings per share of 7.80 sen compared to 51.80 sen in 3Q22.
In a filing to Bursa Malaysia today, KLK said its plantation segment profit dropped substantially by 78.8 per cent to RM125.9 million.
This was mainly due to weaker average selling prices of crude palm oil (CPO) and palm kernel (PK), as well as higher CPO production cost.
The group's manufacturing segment reported a loss of RM73.7 million mainly attributable to a decline in revenue to RM4.315 billion and a loss incurred by the oleochemical division which was impacted by eroded demand and profit margin.
For the cumulative period of nine months, KLK recorded a lower net profit of RM717.95 million from RM1.7 billion a year earlier, while revenue declined to RM17.87 billion from RM20.17 billion.
KLK declared an interim single tier dividend of 20 sen in respect of the financial year ending September 30, 2023, which was paid on August 1.
Looking ahead, KLK said it expects both the fresh fruit bunch and CPO yields to be marginally better than a year ago, as a result of recovering momentum.
However, it said this year's production costs are high mainly due to elevated prices of inputs including fertilisers, chemicals and energy; nevertheless, these have recently softened.
"Manufacturing segment, particularly oleochemical sub-segment was not spared from the negative consumer and business environment, predominantly in Europe and China.
"In fact, main bulk of the losses are from Europe due to high energy costs and sluggish demand. However, management is undergoing aggressive restructuring in Europe to contain the worrying losses.
"Demand in Europe will remain dampened in coming quarters while the Asian market recovery is expected to be slightly ahead," it added.
KLK noted that the group continues to leverage on the competitive advantage of local knowledge and global best practices to drive innovation of product applications as well as operational and cost efficiencies.
Overall, the group expects its financial performance for financial year 2023 to be significantly lower compared to the previous financial year.
However, it said the result of the fourth quarter is expected to be better.
KLK's shares closed 10 sen or 0.44 per cent lower to RM22.40 today, giving it a market capitalisation of RM24.21 billion.