Kuala Lumpur Kepong Bhd (KLK) posted a dramatic surge in fourth-quarter earnings, recording a 14-times increase in net profit on the back of stronger results from its plantation and property divisions. This significant uplift came despite non-cash losses from its investment in the UK-based chemicals group, Synthomer plc, which booked RM123.7 million in losses, including a RM60 million impairment.

The Synthomer setback was attributed to amortisation of acquired intangibles, restructuring expenses and costs tied to plant closures.

Plantation & Property Segments Drive Performance

KLK’s plantation division delivered a strong showing, with profits rising 18.8% to RM625.9 million, supported by:

• Improved average selling prices for crude palm oil (CPO) and palm kernel

• Higher CPO sales volume

• Increased fair value gains

The property division also posted a robust recovery, with earnings more than doubling to RM21.7 million, reflecting stronger development activity and improving sentiment—similar to the rising investor interest seen across commercial property in KL and industrial land in Selangor.

For the quarter ended Sept 30, 2025 (4QFY2025):

• Net profit: RM95.96 million (vs RM6.77 million a year ago)

• Revenue: RM6.3 billion, up 11.01%

KLK declared a 40 sen final dividend, bringing the full-year distribution to 60 sen per share, to be paid on Feb 10, 2026.

Operational Outlook & Strategic Moves

KLK said it will continue focusing on:

• Improving plantation yields

• Enhancing operational efficiency

• Strengthening supply-chain traceability to meet global regulatory requirements

However, its manufacturing division continues to face headwinds from:

• Weak oleochemical margins

• Challenging European market conditions

• Higher start-up costs from newly commissioned facilities

Midstream refining margins also remain tight due to elevated feedstock prices and rising competition.

To counter these pressures, KLK is pivoting toward higher value-added downstream products. A key initiative includes a joint venture with AAK AB to develop a specialty oils and fats refinery in Johor, complementing the wider industrial ecosystem in southern Malaysia—a region that continues to attract investors seeking alternatives to mature markets like industrial property in the Subang area or factory sites around Puchong.

For FY2025, KLK booked RM127.5 million in losses and a RM60 million impairment from its Synthomer investment due to weak chemical demand, although improvement was noted in Synthomer’s speciality segments.

With major capital projects now completed, KLK plans to shift toward optimising returns from recent investments. Supported by strong cash flow from plantations and a healthy balance sheet, the group anticipates a better performance in FY2026.

Full-Year Results

For the financial year ended 2025:

• Net profit: RM817.28 million (+38.3% YoY)

• Revenue: RM25.02 billion (+12.33% YoY)

Batu Kawan Bhd Returns to Profit in 4QFY2025

KLK’s improved performance had a positive spillover effect on its major shareholder, Batu Kawan Bhd, in which KLK owns 47.9%.

The group rebounded strongly, recording a net profit of RM69.34 million, reversing a net loss of RM19.76 million a year earlier. Revenue climbed 10.18% to RM6.48 billion.

Batu Kawan proposed a final dividend of 50 sen per share, payable on Feb 12, 2026, bringing the full-year payout to 70 sen.

For FY2025:

• Net profit: RM467.75 million (+56.51% YoY)

• Revenue: RM27.72 billion (+20.23% YoY)

Market Reaction

At Wednesday’s close:

• KLK shares fell 44 sen to RM20.60, valuing the company at RM22.99 billion

• Batu Kawan remained unchanged at RM19.20, with a market cap of RM7.67 billion