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KLK’s 9MFY10 earnings almost double to RM701m

KUALA LUMPUR: Kuala Lumpur Kepong Bhd (KLK) posted a net profit growth of 28% in its third quarter ended June 30, 2010 (3QFY10) to RM243.5 million from RM17.86 million a year earlier on the back of higher crude palm oil (CPO) and rubber prices, and improved performance from the manufacturing and retailing sectors.

Revenue rose 18.8% from RM1.5 billion to RM1.8 billion, with earnings per share (EPS) of 22.87 sen.  

The group achieved higher average CPO and rubber prices at RM2,565 per tonne and RM10.97 per kg in 3QFY10 versus RM2,330 and RM6.57, respectively, a year earlier.

According to notes accompanying the financial statements, plantations profit grew 42.6% to RM262.7 million while the manufacturing sector posted a profit of RM56.8 million compared to losses of RM18 million a year earlier, boosted by the improved performance from the oleochemical division.

The retailing sector achieved a profit of RM4.5 million compared to a RM28.6 million loss a year earlier.

For the nine months to June 30, 2010, KLK’s net profit grew 90.2% to RM701.3 million from RM368.8 million a year earlier, due to higher commodity prices, fresh fruit bunches and rubber production, and turnaround in its manufacturing and retailing sectors.

It also wrote back RM34.4 million on the allowance for diminution in value of investments, against last year’s allowance of RM61.4 million.

The group’s average selling prices for CPO and all grades of rubber during the nine-month period were RM2,390 per tonne and RM9.37 per kg compared with RM2,267 per tonne and RM6.89 per kg, respectively, a year earlier.

However, it noted that production costs had risen due to rehabilitation work in Sumatera Utara and the high cost of new fields coming into maturity in Kalimantan Timur.
The plantation sector’s profit rose 14.9% to RM774.3 million in 9MFY10. The manufacturing sector was back in the black with a profit of RM118 million from a loss of RM21.9 million in 9MFY09, due to higher revenue.

The retailing sector recorded profits of RM36.7 million compared to losses of RM39.5 million. This was largely achieved through better revenue and reduction in operating expenses, said KLK. 

For the current financial year, the group said profits were expected to be substantially higher in view of continuing satisfactory performance from the plantation sector, better returns from the oleochemical division and positive results from the retailing sector.

No dividends were declared this quarter. An interim single-tier dividend of 15 sen per share was declared on May 26 and paid on Aug 9.

Meanwhile, Batu Kawan Bhd, which holds a 45.65% stake in KLK, recorded RM201.11 million in net profit for 3QFY10, 97% higher than RM101.82 million a year earlier, although revenue dipped 10.4% from RM61.75 million to RM55.32 million.

For the cumulative period, net profit rose 81.4% to RM419.2 million even as revenue fell 8.3% to RM167.2 million.

The group’s strong growth was attributed to the RM84 million surplus from the disposal of an unquoted investment and higher profit contribution from KLK. Nonetheless, its chemical subsidiaries reported lower profits due to low selling prices.

Batu Kawan’s profit for the current financial year is expected to be higher than last year’s in view of the surplus from the disposal and the contribution from KLK.

KLK’s stock closed two sen higher at RM16.90 yesterday while Batu Kawan shed four sen to close at RM11.60.
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