KUALA LUMPUR, May 27 — Kuala Lumpur Kepong Bhd’s net profit dipped 80.5 per cent to RM27.89 million in the second quarter (Q2) ended March 31, 2020, from RM142.96 million in the same period last year, dragged by unrealised foreign currency exchange losses.

Revenue shrank to RM3.80 billion versus RM3.94 billion previously, said the oil palm plantation and oleochemicals manufacturing group.

KLK also declared a first interim dividend of 15 sen per share — same as a year ago — to be paid on Aug 4, 2020.

In a filing with Bursa Malaysia today, KLK said the unrealised foreign currency exchange losses totalling RM178.1 million comprised RM145.3 million loss from translation of inter-company loans denominated in foreign currencies, and RM32.8 million loss derived from translation of US dollar bank loan in an Indonesian subsidiary caused by drop in exchange rate of Indonesian rupiah against US dollar.

"The bulk of the RM134.5 million loss was due to depreciation of Indonesian rupiah exchange rate against US dollar and the ringgit. Amid the Covid-19 crisis, investors flocked to safe haven assets, causing the US dollar to strengthen against emerging market currencies,” it said.

Excluding the foreign exchange impact, KLK said the group’s pre-tax profit for the quarter under review increased by 43.3 per cent year-on-year (y-o-y) to RM280.7 million versus RM195.9 million previously.

On the plantation segment, it said profit surged 44.4 per cent to RM145.7 million in Q2 versus RM100.9 million a year earlier, supported by higher prices of crude palm oil (CPO) and palm kernel (PK).

The price of CPO rose 30.6 per cent y-o-y to RM2,572 per tonne while PK price increased 18.1 per cent y-o-y to RM1,537 per tonne, it added.

Meanwhile, it said profit of the segment was also supported by unrealised gain of RM11.2 million arising from changes in fair value on outstanding derivative contracts, but was partially offset by the fresh fruit bunches production which declined 9.8 per cent to 890,872 tonnes and led to a higher CPO production cost.

On the manufacturing segment, KLK said its profit was 4.4 per cent higher at RM97.4 million in Q2, despite a 13.5 per cent decline in revenue to RM1.98 billion and the recognition of a higher unrealised loss from fair value changes on outstanding derivative contracts of RM17.4 million.

For the six-month period ended March 31, 2020, the company’s net profit slumped to RM195.09 million from RM393.87 million in the same period last year, while cumulative revenue eased to RM7.88 billion from RM8.03 billion previously.

Moving forward, KLK said CPO prices were expected to remain under pressure in the second half of financial year 2020 (FY20) due to economic uncertainties resulting from the Covid-19 pandemic.

"Nevertheless, plantation profit is expected to be satisfactory for the year in view of this segment’s results and CPO prices achieved to-date.

"Overall, the group anticipates satisfactory profits for FY20 subject to uncertainties arising from the Covid-19 pandemic,” it said. — Bernama