IOI Corp starts FY26 with higher earnings, revenue at RM3 bln

KUCHING: IOI Corporation Bhd (IOI Corp) kicked off its first quarter of financial year 2026 (1QFY26) with a 22 per cent rise in core profit to RM368 million, supported by stronger contributions from both its plantation and resource-based manufacturing segments. 

Public Investment Bank Bhd (PublicInvest Research) said the results were in line with expectations, making up 27 per cent of its and the street's full-year forecasts after excluding several exceptional items, including net foreign exchange translation loss, a RM22.8 million net FX gain, a RM41.9 million net fair value loss on derivative instruments, and a RM21.1 million net fair value gain on biological assets. 

For 1QFY26, quarterly revenue grew from RM2.6 billion to RM3 billion, fuelled by higher sales in the plantation segment (up 48 per cent year-on-year) and resource-based manufacturing segment (up 13 per cent year-on-year).

Average CPO price increased from RM4,059 per metric tonne to RM4,169 per metric tonne, while palm kernel price rose sharply from RM2,699 per metric tonne to RM3,529 per metric tonne.

Fresh fruit bunches (FFB) production improved 2.2 per cent year-on-year to 777,000 metric tonnes, and the oil extraction rate held steady at 21.34 per cent. 

Sales from the resource-based manufacturing division climbed from RM2.5 billion to RM2.9 billion, led by stronger contributions from the refining and oleochemical sub-segments.

Core profit wise, excluding exceptional items, the group's 22 per cent higher core profit was driven by improved plantation earnings and robust performance from the resource-based manufacturing segment. 

PublicInvest Research noted that the group's plantation earnings rose 13.7 per cent year-on-year to RM401.6 million, supported by firmer selling prices and a stable oil extraction rate. 

CPO production cost increased slightly to RM1,916 per metric tonne, while resource-based manufacturing earnings jumped from RM37.6 million to RM131.2 million, underpinned by stronger refinery and oleochemical performance. 

Looking ahead, in anticipation of the potential onset of La Nina weather phenomenon, coupled with the low production cycle in the next 4 months, ahead of the festive celebration early next year, management expects the CPO price to stay above RM4,000 per metric tonne over the next 3 to 4 months. 

"Despite an aggressive replanting target of 12,000 hectares in Sabah, the group is projecting FFB production growth of 5 to 10 per cent in FY26 due to additional mature areas and improved yields. 

"For the downstream segment, management believes that the outlook for the refinery and commodity sub-segment will be challenging, with sales margin to remain at near breakeven levels as price competition heightens due to the overcapacity situation in Indonesia. 

"The oleochemical sub-segment is expected to see better margins, supported by a broader customer base," it said.