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Thursday, February 17, 2011

Plantation and property sectors boost IOI results

PETALING JAYA: IOI Corp Bhd's net profit rose 12.8% to RM520.2mil in the second quarter ended Dec 31, 2010 compared with RM461.2mil in the previous corresponding period mainly on higher contribution from its plantation and property divisions.

Revenue for the second quarter stood at RM3.97bil, which was 29.7% higher than RM3.06bil posted in the same period last year.

The company proposed an interim single-tier dividend of 80%, or 8 sen per ordinary share of 10 sen each, which is not taxable in the hands of the shareholders, be declared in respect of the financial year ending June 30, 2011.

In a filing with Bursa Malaysia, IOI said the plantation segment reported a 14% increase in operating profit to RM363.7mil for the second quarter compared with RM319. 9mil previously.

“The higher profit is mainly due to higher crude palm oil (CPO) and palm kernel prices realised. Average CPO price realised for second quarter in this financial year (FY11) is RM2,800 per tonne comp ared with RM2,225 per tonne for the second quarter of FY10,” it said, adding that the average palm kernel price realised for the second quarter o f FY11 was RM1,979 per tonne compared with RM1,089 per tonne previously.

It said the higher operating profit for property development and investment was mainly due to gains recognised on disposal of investment properties amounting to about RM61mil during the second quarter.

“Despite the higher profits achieved in refining activities, the resource-based manufacturing segment recorded lower profits mainly due to fair value losses on the adoption of FRS 139,” it said.

During the second quarter, the total fair value losses on derivative contracts recognised were about RM73mil.

For the first six months ended Dec 31, 2010, IOI's net profit jumped 8.4% to RM1.02bil from RM939.6mil in the same period last year. Its revenue was RM7.49bil, which was 18.2% higher th an RM6.34bil previously. IOI said the group was expected to perform satisfactorily in the current financial year underpinned by strong palm oil and palm kernel prices and a resilient property market.

CIMB Research said at 40% of its full-year forecast and 42% of consensus projections, IOI's core net profit for the firs t six months was broadly in line as it expected better secondhalf earnings.

“The second-quarter resourcebased earnings missed our forecast because of RM73mil fair value losses on derivative contracts following the adoption of FRS 139 in the current year. However, this was offset by a RM61mil gain on the disposal of investment properties,” the research house said.

It said the second-quarter results also included a RM20.6mil loss on foreign-denominated debts, which was a reversal from a gain of RM159.7mil in first quarter.

An analyst told StarBiz that IOI's results for the quarter under review were within market expectation and the group was expected to post better results in the second half.

“The group is expected to do well in the second half given the higher CPO price as well as manufacturing earnings, particularly a stronger earnings from downstream business. The current CPO price is over RM3,000 per tonne, which is higher than RM2,700-plus per tonne realised in the first half,” the analyst said.

By The Star

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