IOI Corp’s Q3 profit hit by foreign currency translation loss

KUALA LUMPUR, May 27 — IOI Corporation Bhd’s net profit fell to RM100,000 for the third quarter (Q3) ended March 31, 2020, from RM248.5 million in the same period last year due to a large net translation loss on foreign currency-denominated borrowings.

However, revenue was higher at RM2.03 billion compared to RM1.89 billion previously.

In a filing with Bursa Malaysia, the integrated palm oil industry player said it experienced a total net foreign currency translation loss of RM239.3 million on borrowings versus a RM67.3 million translation gain a year earlier.

This was on top of lower contribution from its resource-based manufacturing segment, which saw its profit before tax dip by 39 per cent year-on-year to RM119.1 million.

“The lower profit is due mainly to lower operational contributions from the oleochemical and refining sub-segments with lower margins and sale volume,” it said.

On the other hand, the plantation segment’s profit rose 25 per cent to RM165.4 million on the back of higher crude palm oil and palm kernel prices realised.

IOI Corporation noted that share of loss from its specialty fats associate, Bunge Loders Croklaan Group BV, was recognised due mainly to the provision of doubtful debts as well as marked-to-market losses from commodity derivatives taken up by Loders in the quarter under review.

Moving forward, the group said the expected significant increase in oil palm fruits production during this quarter would counter the effect of the low palm oil prices; hence its plantation segment’s performance was likely to be similar to that in Q3.

It noted that the Covid-19 pandemic had brought a lot of operating uncertainties and damage to the Malaysian and global economies.

“Fortunately, with our past focus on cost efficiency, strong cash position and the resilient fundamentals of our palm oil business, we expect to see through this pandemic crisis relatively unscathed,” it added. — Bernama