KUALA LUMPUR (May 20): Batu Kawan Bhd [KL:BKAWAN] and its 47.74%-owned associate Kuala Lumpur Kepong Bhd [KL:KLK] on Monday reported lower earnings for their second quarter ended March 31, 2024 (2QFY2024) amid continued underperformance in the manufacturing and property segments.

KLK’s net profit fell 38.65% to RM117.07 million or 10.8 sen per share, from RM190.81 million or 17.70 sen per share a year earlier, its bourse filing showed.

Quarterly revenue saw a 9.81% decrease to RM5.46 billion from RM6.05 billion in 2QFY2023.

The group announced an interim dividend of 20 sen per share, payable on July 30.

Notably, only its plantation segment saw a profit growth of 24.5% to RM357.68 million, boosted by higher palm kernel prices and increased crude palm oil (CPO) sales volumes.

Its investment in associate Synthomer plc saw a reduction in losses to RM162.09 million, attributed to poor performance and non-operating charges related to amortization and restructuring.

The manufacturing segment's profit declined 69.5% to RM56.7 million, with the oleochemical sub-segment in Europe continuing to face losses.

Nonetheless, KLK noted the manufacturing segment has reported increased consumer demand, especially in Europe, and energy prices have eased from peak levels, suggesting a more optimistic future.

“Strategic policies of implementing restructuring strategies to go downstream in the value chain should bear fruits,” it added.

The property development segment’s profit dropped 59.4% to RM7.6 million mainly due to recognition of development profits from phases with lower gross margin, while revenue fell marginally to RM56.7 million.

For the first six months of FY2024, KLK’s net profit fell 45.7% to RM344.01 million from RM633.85 million in the previous corresponding period, as revenue declined 13.05% to RM11.09 billion from RM12.76 billion, again due to lower contribution from the manufacturing and property development segments.

Batu Kawan's 2Q net profit down 29%

Batu Kawan reported a 29.43% decrease in net profit to RM84.72 million or 21.54 sen per share in 2QFY2024, from RM120.05 million or 30.51 sen per share a year earlier. Revenue, meanwhile, fell 10.3% to RM5.66 billion from RM6.31 billion in 2QFY2023.

An interim dividend of 20 sen per share has been declared, to be paid on Aug 1.

Despite weaker CPO selling price realised, the group's plantation segment's profit was 25.4% higher at RM365.76 million mainly due to higher CPO sales volume and palm kernel selling price realised, according to the group's exchange filing.

The manufacturing segment's profit declined 64.3% to RM78.35 million on 13.8% lower revenue of RM4.58 billion amid lower profit contributions from the oleochemical division.

Notwithstanding higher caustic sales volume, the industrial chemical division's profit was 6.3% lower at RM33.00 million, mainly due to lower caustic selling prices. Results for the same quarter in the previous year included a one-off gain of RM72.86 million from the disposal of the paper chemical business in Europe.

For the property development segment, despite revenue dropping marginally to RM56.72 million, the profit was 58.8% lower at RM7.77 million mainly due to recognition of development profits from phases with lower gross margin

For the first six months of FY2024, Batu Kawan’s net profit fell 44.72% year-on-year to RM196.46 million from RM355.36 million, as revenue dipped 13.58% to RM11.5 billion from RM13.3 billion, again due to lower contribution from the manufacturing and property development divisions.

Batu Kawan shares closed unchanged at RM20.24, maintaining a market capitalisation of RM7.95 billion. KLK, meanwhile, rose four sen or 0.18% to RM22.44, valuing the group at RM24.6 billion.