IOI Corp records higher revenue for FY20

IOI Corp records higher revenue for FY20

KUALA LUMPUR: IOI Corp Bhd’s net profit eased to RM600.90 million in the financial year ended June 30, 2020 (FY20), from RM631.70 million a year earlier. 

Revenue for the quarter increased to RM7.80 billion from RM7.39 billion a year earlier 

IOI Corp’s plantation segment profit of RM701.5 million for FY2020 is 45 per cent higher than the profit of RM483.9 million for the financial year ended June 30, 2019 (FY2019) , mainly due to higher crude palm oil (CPO) price realised as well as improved crude palm oil extraction rate (OER).

Average CPO price realised for FY2020 was RM2,314 per metric tonne from RM2,025 per metric tonne in 2019.

“The higher prices realised and improved OER are offset by lower fresh fruit bunch production due to aggressive replanting and also the delayed effects of the long dry spells in 2018 and 2019,” IOI Corp said in a Bursa Malaysia filing today.

Meanwhile, its resource-based manufacturing segment profit of RM385.1 million for FY2020 is 30 per cent lower than the profit of RM553.4 million reported last year. 

Moving forward, the group expects to sustain its operational and financial performance during financial year ending June 30, 2021 (FY21), despite uncertain economic recovery and operational challenges caused by the COVID-19 pandemic. 

IOI Corp said oil palm crop production is likely to increase gradually from September to November this year, while the demand is expected to taper off from the high restocking activity in the major importing countries.

Demand for crop will also be supported by festive demand during the Chinese Full Moon Festival and the Diwali celebration in November.

“As a result, palm oil price may decline slightly during the fourth quarter of this year from its current strong level,” it added. 

Palm oil price increased significantly to above RM2,700 per tonne in August 2020 from around RM2,100 per ton in May, due to the three-year low palm oil stock at the end of July as a result of lower supply affected by heavy rain coupled with higher demand from major importing countries such as China and India.

Oil palm crop production for the group is expected to be flat or slightly lower in FY2021 due to the aggressive replanting programme carried out in Sabah, offset by the increased crop production from IOI Corp’s young Indonesian plantings and its associate company, Bumitama Agri Ltd.

“We have been actively implementing mechanisation in our estates and digitisation in our business processes in order to reduce reliance on foreign workers and improve our efficiency in estate operations as well as administrative control,” said IOI Corp.