Its revenue grew marginally by 1% to RM3.67 billion from RM3.63 billion a year earlier, according to IOI’s filing with Bursa Malaysia.
These were attributed to lower contribution from their plantation division which saw lower production of fresh fruit bunch (FFB) and higher cost of production alleviated by higher crude palm oil (CPO) prices.
The plantation segment profit for Q1 FY2023 of RM351.8 million was 28% lower than the profit for Q1 FY2022 of RM487 million. This was due mainly to lower FFB production and higher cost of production mitigated by higher CPO price realised.
Average CPO prices for Q1 FY2023 was RM4,496 per tonne compared to a year ago which was only RM4,032.
However, its resource-based manufacturing segment profit surged 178.7% in Q1 to RM128.5 million from RM46.1 million a year earlier due to higher margins from oleochemical and refining sub-segments offset by lower sales volume from these sub-segments.
Excluding the fair value loss on derivative financial instruments of RM193 million (Q1 FY2022 – RM108.7 million), the resource-based manufacturing segment reported an underlying profit of RM321.5 million for Q1 FY2023 that was 108% higher than the underlying profit of RM154.8 million a year ago.
Due to firm CPO prices expected for the upcoming two quarters, prospects on IOI’s financial performance for the remaining of FY2023 are expected to remain satisfactory, IOI said.
For Q2 FY2023, oil palm fruit production is expected to drop minimally as young palm trees are entering into a delayed peak production cycle. This is also curbed by higher employment rate in its plantations, it added.
“As for our refinery and commodity marketing sub-segment, demand for palm oil is expected to moderate during the winter months in the northern hemisphere while margins are volatile due to changes in Indonesia’s palm oil export levy structure,” it said.
Given the high energy costs and with various regions of the world experiencing economic slowdown, operating conditions will be challenging for its oleochemical sub-segments, it said.
At market close today, IOI Corp’s share price fell two sen to RM3.98, giving it a market capitalisation of RM25.02 billion.