KUALA LUMPUR : Kuala Lumpur Kepong Bhd (KLK) is anticipated to deliver stronger net profit in the second half of the financial year ending 30 September 2025 (2HFY25), with the absence of derivatives-related losses expected to bolster earnings performance, according to CIMB Securities Research.
The research house noted that although KLK has revised its full-year fresh fruit bunch (FFB) production guidance to reflect mid-single-digit growth, it maintains a positive outlook for the second half, supported by improved production levels.
CIMB Securities highlighted that this implies production in 2HFY25 could contribute approximately 52 per cent of total annual output, sustaining earnings momentum. However, the impact of this uplift is likely to be partially offset by the current decline in crude palm oil (CPO) prices.
KLK recorded a 2.5 per cent year-on-year decrease in ex-mill CPO production costs to RM2,100 per tonne in the first half of FY25 (1HFY25), mainly due to lower fertiliser prices.
Despite this, the firm continues to face headwinds in several areas. Refining margins are expected to remain weak, its glove division remains in the red, and gas supply disruptions have adversely affected operational efficiency at its oleochemical facilities during the third quarter of FY25.
KLK disclosed that the RM252 million in derivatives losses reported in 1HFY25 were largely unrealised, with approximately RM143 million related to US dollar hedging activities.
CIMB Securities has maintained its ‘Hold’ rating on KLK, with an unchanged target price of RM21.50.
-Business Times
