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Higher CPO Prices Drive up KLK 2Q Profits

The group’s 2Q21 net profit surges over 17 times to RM490m from RM27.9m in the same period last year

Kuala Lumpur Kepong Bhd (KLK) expects its plantation business profit for the financial year ending Sept 30, 2021 (FY21), to chart higher compared to the previous years, due to buoyant crude palm oil (CPO) prices backed by tight inventory and global supply.

The group, which recorded higher plantation division’s earnings in the second quarter ended March 31, 2021 (2Q21), also expects a better financial performance in the current financial year amid a more difficult operating environment due to the pandemic.

“Despite the difficult operating environment, the oleochemical division has performed well. The coming quarters will be challenging for this division due to zero duty for oleochemical products in Indonesia.

“Nevertheless, this division anticipates its profit for FY21 to be much better than the preceding year. Overall, the group’s profit for FY21 will be significantly higher,” KLK noted in a bourse filing yesterday.

KLK’s 2Q21 net profit surged over 17 times to RM490.4 million from RM27.9 million in the same period last year, driven by higher revenue across its core segments plantation, manufacturing and property development.

Revenue for the quarter rose 18.5% year-on-year (YoY) to RM4.5 billion as earnings per share rose to 45.5 sen.

KLK’s property development profit increased 121.5% YoY to RM38.9 million in the quarter, attributable mainly to the Bandar Seri Coalfields project in Sungai Buloh, Selangor.

Its manufacturing segment profit soared 86.4% YoY to RM330.6 million underpinned by higher revenue of RM4.96 billion, mainly derived from better performance in Malaysia, China and Europe operations.

The group’s plantation segment’s profit rose 86.9% YoY to RM566.9 million due to the stronger CPO and palm kernel (PK) selling prices, improved profit from processing and trading operations and foreign-exchange gains from translation on US dollar bank loans of a subsidiary in Indonesia.

KLK said the decline in CPO and PK sales volume, and higher unrealized loss from changes in fair value of outstanding derivative contracts, which amounted to RM41.7 million, had partially offset the increase in segmented profit.

The group declared an interim single-tier dividend of 20 sen per share, payable on Aug 30, 2021.


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