Kuala Lumpur: IOI Corporation Bhd (IOI Corp) experienced a significant decline in its net profit for the second quarter ended December 31, 2024 (2Q FY2025), with earnings dropping by two-thirds to RM111.1 million from RM335.4 million in the corresponding quarter of the previous year. This decline occurred in spite of a stronger contribution from the plantation segment, as revealed in the company's recent financial disclosures.
According to BERNAMA News Agency, the group's financial performance was adversely affected by a net foreign currency translation loss on foreign currency-denominated borrowings amounting to RM210.0 million during the quarter under review. This contrasts sharply with the net foreign currency translation gain of RM33.3 million recorded in the prior year.
The plantation segment, however, showed robust growth, with profit before tax rising 56 percent year-on-year to RM498.1 million in 2Q FY2025. This improvement was driven by higher realized prices for crude palm oil (CPO) and palm kernel, along with a reduction in production costs.
The group's revenue increased to RM2.97 billion, up from RM2.39 billion in the previous year, as stated in their filing with Bursa Malaysia. Additionally, IOI Corp announced a dividend of 5.0 sen per share, compared to 4.5 sen in 2Q FY2024, with the dividend scheduled for payment on March 24, 2025.
Looking ahead, IOI Corp expressed optimism about its prospects, anticipating a strong recovery in fresh fruit bunches (FFB) production over the next three months, attributed to improved weather conditions and the end of the low production season. The company maintains a positive outlook on the financial performance of its plantation segment for the rest of FY2025, buoyed by the anticipated strong CPO prices.
The company also commented on the recent volatility in CPO prices, which have fluctuated from over RM5,000 per tonne to below RM4,200 per tonne, before rebounding to approximately RM4,500 per tonne. IOI Corp expects CPO prices to remain elevated above RM4,200 per tonne in the coming months, supported by factors such as low CPO inventory levels, increased demand ahead of Ramadan, and the implementation of Indonesia's B40 biodiesel mandate.