KUALA LUMPUR (Sept 27): Lower selling prices of crude palm oil (CPO) and fresh fruit bunches (FFB) resulted in Kim Loong Resources Bhd’s net profit for the second quarter ended July 31, 2023 (2QFY2024) falling 12.72% to RM43.35 million, from RM49.67 million a year ago. 

Likewise, quarterly revenue fell 31.68% to RM385.61 million versus RM564.38 million previously, despite the plantation group noting that it recorded higher FFB production, while CPO output was largely flat in 2QFY2024. 

FFB production rose 31% to 83,007 metric tonnes (MT) versus 63,330 MT previously, while CPO production fell 3% to 81,307 MT from 84,114 MT, according to Kim Loong’s bourse filing on Wednesday. 

However, average FFB selling price fell 33% to RM695 per MT from RM1,034 per MT previously, and average CPO selling price fell 35% to RM3,799 per MT from RM5,812 per MT.

Despite the weaker quarterly results on a year-on-year basis, the group declared an interim single-tier dividend of five sen per share, with an ex-date of Oct 25, to be paid on Nov 15. 

For the six-month period ended July 31, 2023 (1HFY2024), Kim Loong’s net profit dropped 15.78% to RM74.87 million, as compared to RM88.9 million in the same period a year earlier, while revenue fell 33.69% to RM712.29 million from RM1.07 billion previously.

Similarly, the weaker fiscal performance in 1HFY2024 was largely due to the weaker comparative average selling prices of FFB and CPO, which fell 36% and 35% respectively.

Looking to the remaining quarters of the financial year ended Jan 31, 2024 (FY2024), Kim Loong said that while CPO price has been volatile and unpredictable, the group is hopeful for average CPO selling price to stay above RM4,000 per MT.

On the FFB production front, the group expects it to be 15% higher than what was achieved in FY2023, in view of more replanted area coming into maturity, as well as a better age profile of young palm productive areas.

“As for the palm milling operations, the management expects to achieve a total processing throughput of 1.5 million MT of FFB for the current financial year,” it added.

Kim Loong said it also expects its biogas plant in Keningau, which commenced supply of power to the grid in December last year, to contribute positively to the group’s revenue, as well as profit for FY2024.

“On the other hand, our biogas plant at Telupid is expected to commence operations by end-FY2024,” it added.

Overall, Kim Loong said it expects to perform “satisfactorily” in FY2024, despite the plantation industry’s outlook remaining challenging, in view of commodity price volatilities, labour shortages, inflationary pressures on cost, persisting weather extremities, and biofuel policy changes.

Shares in Kim Loong closed unchanged at RM1.84 on Wednesday, giving the group a market capitalisation of RM1.79 billion.