KUALA LUMPUR (May 24): Kuala Lumpur Kepong Bhd's (KLK) net profit declined 65.09% year-on-year for the second quarter ended March 31, 2023 (2QFY2023) mainly due to losses from an associate and lower contribution from the plantation and manufacturing segments.

Net profit for 2QFY2023 fell to RM190.81 million from RM546.57 million a year ago while revenue dropped 5.26% to RM6.05 billion from RM6.38 billion following lower crude palm oil (CPO) and palm kernel (PK) prices.

Notably, during the quarter under review, it booked an equity loss of RM169.7 million (2QFY2022: share of equity profit RM10.1 million) from an overseas associate, Synthomer plc.

The loss reported by Synthomer plc was mainly caused by non-operating charges incurred on impairment loss of a business division, amortisation of acquired intangibles, restructuring and site closure costs.

Earnings per share during the quarter decreased to 17.7 sen from 50.7 sen in the corresponding quarter a year ago, the palm oil giant said in its filing on Wednesday (May 24).

Nonetheless, KLK declared a single-tier interim dividend of 20 sen per share for the financial year ending Sept 30, 2023. The dividend, with an ex-date of July 10, will be paid on Aug 1.

During the quarter, it also saw a net reversal of impairment on financial assets of RM1 million versus RM17.18 million a year ago.

For the cumulative six months ended March 31, 2023 (1HFY2023), KLK’s net profit was down 44.69% to RM633.85 million from RM1.15 billion, while revenue fell 3.45% to RM12.76 billion from RM13.21 billion.

Moving forward, the group expects its financial performance for FY2023 to be significantly lower.

“As a group, we have made concerted efforts to continuously improve estate management, especially in acquired estates, and clearing of backlog operational works with the return of adequate guest workers in peninsular Malaysia,” KLK group chief executive officer Tan Sri Lee Oi Hian said in a statement.

He also expects that the crude palm oil (CPO) price will be within the current level, supported by the forecast of El Niño, which will impact its production.

KLK's realised CPO prices averaged RM3,727 per tonne in 2QFY2023, down 14.9% from RM4,378 in 2QFY2022, while palm kernel (PK) prices declined 51.7% to RM1,864 per tonne versus RM3,860.

“Notwithstanding the challenging second half of FY2023, our focus is to continue to improve our efficiencies,” he added.

Shares in KLK settled down six sen or 0.27% at RM22.54 on Wednesday, valuing the group at RM24.37 billion.