KUALA LUMPUR: IOI Corp Bhd's net profit for the second quarter ended Dec 31, 2023 fell to RM335.4 million from RM712.1 million garnered previously due to lower contribution from the resource-based manufacturing segment. Its revenue dropped to RM2.4 billion from RM3.3 billion compared to a year earlier.
In a filing to Bursa Malaysia, IOI Corp said profit from the resource-based manufacturing segment tumbled 81.7 per cent to RM85 million against RM464.3 million, mainly due to lower margins from oleochemical and refining sub-segments as well as lower sales volume from the refining sub-segment.
However, the group said it maintained a positive outlook on the operating performance of its plantation segment for the remaining quarters of FY24 with palm fruits production forecast to be moderately higher than in the comparative period last year.
"This is mainly due to labour productivity improvement as well as higher production from the young palm trees in our Indonesian and Peninsular Malaysian plantations," it added.
IOI Corp expects continued low or negative refining margins in its refinery and commodity marketing sub-segment, due largely to the overcapacity of refineries in Indonesia coupled with the raw material price advantage from their country's crude palm oil (CPO) export duty policy.
For its oleochemical sub-segment, the outlook remains challenging due to the uncertainties in the global economy and the US-China geopolitical tensions as well as shipping disruptions and freight costs due to the recent attacks in the Red Sea.
The group's speciality fats sub-segment, Bunge Loders Croklaan (BLC), is expected to be driven by a strong performance in its North American business and the introduction of innovative product application.
"We anticipate BLC financial performance to continue to be driven by the strong performance of its North American business and the introduction of innovative product applications," it added.
The US Dollar-Ringgit exchange rate which affects the foreign exchange translation gain/loss arising from its USD-denominated borrowings is expected to remain volatile during the first half of 2024.