Core Data Highlights: A Quarter of Significant Gains

IOI Corporation Berhad delivered a strong performance in Q3 FY2025, showcasing impressive growth across its key financial metrics. Let’s break down the numbers:

Quarterly Performance (Q3 FY2025 vs. Q3 FY2024)

This substantial growth in profit before tax, driven by a higher contribution from the plantation segment, reflects a positive shift in the company’s operational landscape.

Year-to-Date Performance (Q3 YTD FY2025 vs. Q3 YTD FY2024)

The cumulative performance for the first nine months of FY2025 also paints a positive picture, with significant double-digit growth across revenue and profitability metrics, reinforcing the company’s upward trajectory.

Segmental Performance: The Drivers of Growth

IOI Corp’s operations are primarily divided into Plantation and Resource-based Manufacturing. Here’s how each segment fared:

Plantation Segment

The plantation segment was the primary driver of the strong performance. For Q3 FY2025, its profit increased by 27% to RM310.6 million (from RM244.9 million in Q3 FY2024). This was largely due to higher realised prices for Crude Palm Oil (CPO) and Palm Kernel (PK), coupled with an improved share of associates’ results. Despite a slight dip in Fresh Fruit Bunches (FFB) production and Oil Extraction Rate (OER), the higher commodity prices provided a significant tailwind.

Resource-based Manufacturing Segment

This segment’s profit for Q3 FY2025 stood at RM71.1 million (compared to RM44.4 million in Q3 FY2024). However, the underlying profit saw a 20% decline, primarily due to lower contributions from the oleochemical sub-segment, which faced lower sales volumes and reduced share of associate results. This was partially offset by a better performance from the refinery sub-segment, benefiting from higher margins.

Financial Health and Cash Flow

IOI Corp’s balance sheet remains robust. As at 31 March 2025, total equity increased to RM12,256.7 million (from RM12,009.7 million at 30 June 2024), and net assets per share improved to RM1.92 (from RM1.88). The group’s total liabilities decreased, indicating a strengthened financial position.

From a cash flow perspective, net cash generated from operating activities for the nine months ended 31 March 2025 was RM867.0 million. While this is slightly lower than the RM923.8 million in the same period last year, it still represents a healthy operational cash generation. The group utilized more cash in financing activities, largely due to higher dividend payments and debt repayments, leading to a decrease in cash and cash equivalents at the end of the period.

Shareholder Returns: Dividends

IOI Corp continues to reward its shareholders. The Board declared a first interim single tier dividend of 5.0 sen per ordinary share for the financial year ending 30 June 2025, which was paid on 24 March 2025. This compares favorably to the 4.5 sen dividend declared for the same period in the previous financial year, indicating a consistent commitment to shareholder returns.

Risks and Prospects: Charting the Course Ahead

Looking ahead, IOI Corp acknowledges both opportunities and challenges in the market. The company’s strategic outlook provides insights into how it plans to navigate these dynamics:

Crude Palm Oil (CPO) Market

The CPO price has seen a declining trend since April 2025, falling from a high of RM4,700 per metric ton (MT) to around RM3,900 per MT recently. The company anticipates higher FFB production in Q4 FY2025 due to improved weather and the end of the low production cycle. This increase in production is likely to lead to higher palm oil stock, which could exert downward pressure on CPO prices. However, the resumption of demand from major buyers and Indonesia’s B40 biodiesel mandate are expected to provide crucial price support. The recent price correction has also enhanced palm oil’s competitiveness against other vegetable oils. IOI Corp projects CPO prices to range between RM3,700 and RM4,000 per MT for the remainder of its financial year ending 30 June 2025.

Plantation Segment Outlook

Despite the expected lower CPO prices, the plantation segment is set to recover significantly in FFB production for Q4 FY2025. This higher production volume is anticipated to help the segment maintain a steady financial performance.

Resource-based Manufacturing Outlook

• Refinery and Commodity Marketing: Refining margins were positive in Q3 FY2025, partly due to Malaysia’s increased CPO export duty. However, an increase in Indonesia’s CPO levy in May 2025 may put some pressure on Malaysian refinery margins.
• Oleochemical Sub-segment: This segment continues to face a challenging operating environment, influenced by ongoing geopolitical tensions and U.S. tariffs. The previously high palm kernel oil (PKO) prices, a key feedstock, impacted sales volume and margins. However, the recent decline in PKO prices is expected to support improved sales volume and margins going forward. The company remains focused on operational efficiency and cost optimisation.
• Specialty Fats Sub-segment (Bunge Loders Croklaan): Sales margins, particularly for cocoa butter equivalents, are expected to remain robust for the final quarter of FY2025. The U.S. tariffs are not anticipated to affect the performance of plants in North America.

Currency Volatility

The Malaysian Ringgit is expected to remain volatile against the US Dollar, influenced by uncertainties surrounding U.S. trade policies, geopolitical tensions, and interest rate movements in the U.S.

Overall, the Group expects its operating and financial performance for the final quarter of FY2025 to be satisfactory, demonstrating a cautious yet optimistic outlook.