Written by Reuters
Friday, 03 July 2009 00:12
PUTRAJAYA: IOI Corporation Bhd said on July 2 that the worst is over for the plantation sector as palm oil prices have recovered from last year’s slump although M&A activity would be muted. Earnings of Malaysian palm oil producers plunged in the first quarter as crude palm oil prices more than halved from a year ago.
IOI, valued at US$8.37 billion (RM29.5 billion), saw net profit nearly wiped out during January-March due to weak crude palm oil prices and large foreign translation losses on its US dollar borrowings. Sime Darby, Malaysia’s top planter, reported a 85% drop in net profit while third-ranked Kuala Lumpur Kepong Bhd saw net profit down 52% in the same period.
“It’s quite obvious it will be better. The industry including ourselves expect to see much better fourth-quarter (April-June) operating results,” IOI executive director Datuk Lee Yeow Chor told Reuters at the company’s headquarters here.
Malaysia is the world’s second-largest palm oil producer after Indonesia.
Crude palm oil prices hit a record RM4,486 a tonne in March 2008 before collapsing at the height of the global financial meltdown and triggering speculation that distressed plantation firms starting out would sell.
But Lee said the opportunities for merger and acquisition (M&A) in the sector were hard to find now as the palm oil price recovery helped smaller firms hold out for better deals. — Reuters
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