Palm oil and property group IOI Corp Bhd (1961) is anticipating its first profit fall for the current fiscal year since the beginning of the decade as commodity prices nosedive and amid a weakening global economy.
It said, however, that while lower profit was anticipated, the overall results this year would still be satisfactory.
"With regard to the group's upstream plantation business, our much higher oil yield and strong financial position will put us in good stead in facing softening crude palm oil (CPO) prices," IOI said in its financial report for first quarter ended September 30 2008.
IOI reported first quarter net profit of RM290.5 million, some 36 per cent lower than the RM451.52 million achieved in the same period last year.
Revenue, however, increased to RM4.65 billion from RM3.12 billion.
The company said recently that it had incurred a loss of RM100 million on foreign exchange contracts, but assured shareholders that it would have no problems meeting cash flow requirements.
IOI is the second largest plantation company in the country, and has consistently been reporting strong results.
The stock was battered after the announcement of the foreign exchange contract loss, but recovered quickly upon IOI's assurance.
Operation-wise, IOI continued to deliver favourable results in the quarter just ended, with its plantation earnings at RM567.1 million, up 43 per cent from the previous corresponding period, due to higher CPO prices then.
Its resource-based manufacturing segment reported an 18 per cent increase in profit despite a RM63.4 million foreign exchange loss in the first quarter.
The group's property segment, meanwhile, recorded operating profit of RM68.2 million, 38 per cent lower than before.
The decline in profit was largely because of the softening property market and lower margins resulting from higher construction costs.
IOI has declared a basic earnings per share of 4.88 sen for the quarter reviewed, against 7.37 sen previously.
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