Its revenue for the quarter came in 5.2% lower at RM6.05 billion compared to RM6.38 billion in the corresponding quarter last year.
The group’s hardest-impacted business segment was investment holding, which suffered a six-fold increase in loss before tax to RM216.4 million from RM30.2 million in Q2 FY2022.
KLK explained that the staggering loss was due to the accounting of a share of equity loss of RM169.7 million from its 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,” KLK said in its Bursa Malaysia filing.
Meanwhile, its manufacturing segment experienced a 50.8% fall in profit before tax (PBT) from RM377.9 million to RM186 million.
The group attributed the segment’s poor performance due to lower profit contributions from the oleochemical division, refineries and kernel-crushing operations.
Similarly, the plantation segment’s PBT fell 32.1% to RM287.3 million compared to RM423.3 million in Q2 FY2022, driven by lower crude palm oil (CPO) and palm kernel selling prices, higher CPO production cost and fair value loss on valuation of unharvested fresh fruit bunches.
However, the group’s property development arm saw an 18% increase in PBT to RM18.7 million compared to RM15.8 million a year ago, underpinned by higher revenue at RM57.5 million compared to RM36.9 million a year ago.
An interim single-tier dividend of 20 sen per share has been declared by the directors in respect to the financial year ending Sept 30, 2023 and will be paid to the shareholders on Aug 1, 2023.
The entitlement date for the dividend shall be on July 11, 2023.
Weaker profitability expected
Moving forward, the group expects that its plantation business will face weaker profitability in the second half of FY2023 due to lower demand compared to the same period last year.
“Producers are remaining cautious as production in Indonesia and Malaysia is not showing signs of a strong recovery that the industry expected at the outset of the year,” it said.
“With demand likely to stay modest going forward due to economic concerns particularly in key consuming countries, (crude palm oil) prices are expected to trend lower,” the company added.
KLK also projected that its manufacturing segment will face headwinds in the form of macroeconomic challenges such as weak consumer sentiment due to elevated inflation and risk of recession.
“The quantitative tightening by most of the major economies has also led to the supply-demand imbalance,” said KLK.
Faced with such prospects, the group expects its financial performance for the second half of FY2023 to be significantly lower.
As at 4.51pm, KLK’s share price was down 76 sen or 3.4% at RM21.78, giving it a market capitalisation of RM 23.89 billion.
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