KUALA LUMPUR (May 16): IOI Corp Bhd posted a net profit of RM305.3 million in the third quarter ended Mar 31, 2017 (3QFY17), down 58% from RM729.4 million a year ago, mainly on lower net foreign currency translation gain on foreign currency denominated borrowings.

Lower fair value gain on derivative financial instruments from its resource-based manufacturing (RBM) segment also posed a drag on earnings, it told Bursa Malaysia today. Its quarterly revenue, however, grew 21% to RM3.47 billion from RM2.87 billion.

Excluding the net foreign currency translation gain and fair value gain on derivative financial instruments from the RBM segment, its underlying profit before tax (PBT) was RM246.3 million for 3QFY17, which is 12% higher from 3QFY16's RM219 million, it said.

The improvement was due mainly to higher contribution from the plantation segment, which saw a 94% jump in profit. The impact of this was, however, moderated by lower contribution from the RBM segment, which fell 76% it said.

For the nine months ended Mar 31 (9MFY17), its net profit slid 38% to RM425.7 million from RM688.7 million a year earlier — due to the same reasons that dragged on its latest quarterly earnings — though revenue rose 17% to RM10.43 billion from RM8.92 billion.

IOI forecast that the group's fresh fruit bunches production in the next quarter would continue to rise from the seasonal low seen in 3QFY17.

"Palm oil prices have dropped in February and March this year, but we anticipate prices to be supported at current levels during the fourth quarter with lower prices expected in July to September quarter due to increased production," the group said.

With lower palm oil and palm kernel prices, IOI Corp said the RBM segment is expected to perform better due to better margins in the fourth quarter.

Meanwhile, the volatility of US dollar-ringgit exchange rate will continue to affect its non-cash flow foreign exchange translation gain or loss from its medium to long-term US dollar-denominated borrowings.

Nevertheless, it said it has refinanced or swapped some of its US dollar loans into euro-denominated ones to diversify its forex risks and reduce borrowing costs.

Overall, IOI Corp expects its operating performance for FY17 to be "satisfactory". Its shares settled unchanged at RM4.64 today, for a market capitalisation of RM29.09 billion.