Batu Kawan Bhd recorded a 25.5% slump in earnings to RM116.95 million for the first quarter ending Dec 31, 2014 (1QFY15) compared to RM156.97 million in the previous corresponding quarter due to lower crude palm oil (CPO) and rubber prices.
This is despite the 24.3% rise in 1QFY15’s revenue to RM3.215 billion compared to RM2.587 billion in 1QFY14, as all segments, except investment holdings, reported higher revenues, Batu Kawan’s filing to Bursa Malaysia today showed.
The company noted that the plantations sector reported a profit of RM246.24 million, 6% lower than last year’s corresponding quarter’s profit of RM261.60 million due to lower prices of CPO and rubber, increased CPO production cost and lower crop production.
“Unrealised gain of RM26.3 million arising from changes in fair value on outstanding derivative contracts was recognised in the quarter,” the report added.
On the manufacturing sector, profit decreased 55% to RM46.39 million, due to lower selling prices, despite revenue rising 12% to RM1.51 billion in 1QFY15 compared to RM1.35 billion in 1QFY14.
The dip in its manufacturing’s earnings was attributed to negative margins from the fatty alcohol and surfactant businesses. The oleochemical division, meanwhile, recorded a profit of RM28.80 million while the chemicals division posted a lower profit of RM16.87 million.
The property development sector fared better with a 5% higher profit at RM13.87 million with revenue at RM29.92 million, up 9%, due to its development project in Bandar Seri Coalfields, Sungai Buloh.
The company noted that the plantations sector profit for the current financial year is expected to be lower than last financial year’s in view of the current crude palm oil price.
“The oleochemical division expects satisfactory profit for the current financial year in anticipation of additional capacities from new plants coming on-stream and the initiatives for operational efficiencies and productivity improvement,” the report stated.
Overall, Batu Kawan expects to record a satisfactory profit for the current financial year, albeit one that is lower than that of the previous financial year.
Batu Kawan closed unchanged at RM18.72 today, with a market capitalisation of RM7.63 billion.