PETALING JAYA: Kuala Lumpur Kepong Berhad (KLK) concluded the financial year with a lower 12-month post-tax profit of RM990.7 million (Patami of RM834.3 million) from RM2.4 billion (Patami of RM2.2 billion) a year earlier, while revenue reduced 13% to RM23.6 billion from RM27.1 billion for the same period.
The Plantation profit contribution came in lower by 46% at RM1.2 billion against RM2.1 billion in FY2022, mainly due to lower crude palm oil (CPO) and palm kernel (PK) prices realised, with an average selling price of RM3,639 per metric tonne (MT) and RM1,841 per MT (FY2022: RM4,227 per MT and RM2,972 per MT respectively despite achieving a marginal improvement in fresh fruit bunch (FFB) yield. The result of plantation segment is also hampered by provision for impairment of plasma receivables associated to KLK Sawit Nusantara of RM60.5 million.
The manufacturing division merely registered a profit before tax (PBT) of RM264.6 million in FY2023 compared to RM1.1 billion a year ago. The dismal performance was largely driven by substantial lower contribution from Oleochemical, especially its European operations where high energy costs and sluggish demand persist. On top of that, the result includes the impact of one-off restructuring cost from the Oleochemical operation in Dusseldorf amounting to RM70.6 million. The mid-stream refining sub-segment managed to deliver a better set of results in FY2023 due to stronger physical sales and strategic pricing positioning.
Included in KLK’s PBT for the current year was share of equity loss of RM194.3 million from an associate, Synthomer Plc, against share of equity profit of RM114.7 million a year ago. Synthomer’s losses were predominantly marred by the soft market in Europe and an impairment of goodwill from the acquisition of the adhesive business.
For its fourth individual quarter ended Sept 30, 2023, KLK’s post-tax profit was RM168.8 million, a mere 31% of RM538.1 million achieved in 4QFY2022. The deterioration in the performance is mainly due to the recognition of provision for impairment of plasma receivables and recognition of the one-off restructuring cost in Oleochemical operation, as discussed above, as well as a 9% and 16% decline in realised CPO and PK prices respectively as compared to 4QFY2022. During the period, the FFB production has improved by approximately 6% against 4QFY2022.
KLK Group CEO Tan Sri Lee Oi Hian said: “The Group went through a series of challenges in FY2023, from catching up on backlog of work in plantation to lower global demand for downstream products, due to prolonged destocking or spot buying by customers. We do not expect to enjoy the exceptional profits due to high CPO prices as seen in the past two years. The management is working hard towards better yields by further optimising estate operational efficiency including harvesting, ensuring insignificant crop losses and improved crop quality.”
