KUALA LUMPUR (May 24): IOI Corp Bhd (KL:IOICORP), Malaysia’s second-largest palm oil producer, said on Friday its net profit fell 38% in the third quarter from a year earlier largely due to currency loss and other paper losses.

Net profit for the three months ended March 31, 2024 (3QFY2024) was RM123.1 million compared with RM197.4 million over the same period a year earlier, IOI Corp said. Earnings per share came in at 1.98 sen in 3QFY2024, compared to 3.18 sen in 3QFY2023.

The company booked a net loss of RM84.2 million on translation loss on foreign currency borrowings and deposits, RM58.3 million in net fair value loss on derivative financial instruments, and RM1.9 million net fair value loss on biological assets. All in, non-underlying items totalled RM144.4 million in 1QFY2024.

Revenue for the quarter meanwhile slipped 7.4% year-on-year to RM2.46 billion from RM2.66 billion.

The group did not declare any dividend for the quarter under review.

Crude palm oil prices may come under pressure from rising seasonal production and the expected good harvest of substitute soybean in South America, IOI Corp said. The anticipated replenishment of palm oil stock by importing countries with low inventories, however, will provide support to prices, it said.

Palm oil prices may hover within RM3,700 to RM4,100 per tonne in the next three months, according to its forecast. 

For the nine-month of FY2024 (9MFY2024), its net profit declined by 29.2% to RM762.5 million, from RM1.08 billion a year ago, as revenue decreased by 26.67% to RM7.06 billion, from RM9.63 billion.

Looking ahead, IOI Corp expects its plantation segment to continue to perform well in the final quarter of the financial year, backed by rising fresh fruit bunches production and higher oil extraction rate.

Meanwhile, its oleochemical sub-segment is expected to continue facing challenges amid the ongoing uncertainties surrounding the global economy and geopolitical tensions.

However, better cost efficiency from its new oleochemical plant in Penang and the flexibility of its new soap noodle plant to customise products will help to mitigate the challenges, IOI Corp said.

For Bunge Loders Croklaan, an associate company engaged in specialty fats sub-segment, IOI Corp said its financial performance is relatively insulated from global economic fluctuation because of the resilient demand for food products.

“The consistently strong performance of the North American business and the significant improvement in the European business will remain key drivers for better” 4QFY2024, it added.

IOI Corp's share price closed unchanged at RM3.98 on Friday, valuing the company at RM25.02 billion ahead of the results announcement.