IOI Corp 3Q net profit more than doubles on higher palm product prices
IOI Corp Bhd's net profit for the third quarter ended March 31, 2025, surged to RM262.3 million, more than doubling from RM123.1 million a year earlier, driven by higher crude palm oil (CPO) and palm kernel prices.
Quarterly revenue rose 11.1% to RM2.74 billion despite lower fresh fruit bunch production and oil extraction rates in the plantation segment.
For the nine months ended March 31, 2025, net profit climbed 42.2% to RM1.08 billion, with revenue increasing 18.6% to RM8.37 billion.
Looking ahead, IOI expects CPO prices to ease to RM3,700-RM4,000 per metric tonne in the final quarter but anticipates improved fresh fruit bunch output to support earnings.
Its shares closed up 1.09% at RM3.72 today, valuing the group at RM23.38 billion. — TMR
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Rather than a threat to diversity, consolidation should be viewed as a strategic evolution – promoting efficiency, best practices, and the sector's future. While its pace and form may vary, consolidation now appears inevitable. Ultimately, this shift will be driven by the commercial choices of individual owners in a business-to-busines-driven landscape. Growing divide in succession and scale A major challenge facing the sector is the generational transition of estate ownership and management. Leading plantation companies like Kuala Lumpur Kepong Bhd , IOI Corp Bhd , Genting Plantations Bhd , Kim Loong Resources Bhd , J.C. Chang Group, Hap Seng Plantations Bhd and Teck Guan Holdings Bhd are largely institutionalised. They have corporate governance, professional management, and financial capacity to invest in sustainability and innovation. Though still anchored by founding families, these firms have evolved into professionally run conglomerates better equipped to handle global demands. In contrast, hundreds of smaller and mid-sized estates – ranging from 100 to a few thousand acres – face stagnation. Often family-owned and passed down through generations, many now struggle with succession. Younger heirs often lack the interest or capability to manage these assets, leading to operational fragmentation, underinvestment, and in some cases, neglect or forced liquidation. These estates also face structural disadvantages. Unlike integrated firms with their own mills and pricing control, smaller players rely on third-party dealers and processors. This dependence reduces their bargaining power, increases price vulnerability, and often results in lower returns. The consequences go beyond business. The oil palm sector is vital to Malaysia's rural economy, especially in Sabah and Sarawak. The decline of mid-tier estates threatens not only productivity but also local jobs and community development. What seems like a succession issue is, in fact, a broader regional and national concern. Economics of consolidation Consolidation presents a strong economic case for boosting productivity. Larger plantation companies are incentivised to acquire or manage smaller, nearby estates to gain scale efficiencies. Integration allows for streamlined operations, shared resources, improved logistics, and better mechanisation – particularly in in-field crop evacuation – advantages often out of reach for smaller players. Many smallholders can't afford replanting costs, which can exceed RM30,000 per hectare, with no revenue during the immature phase. This leads to ageing palms, declining yields, and lower profitability. In contrast, well-capitalised firms can invest in replanting, using high-yielding varieties and precision agriculture to rejuvenate estates and boost output. Revisiting the agency model A promising path for industry consolidation is the revival and modernisation of the estate agency model, once common in Malaysia. Historically, firms like Taiko Plantations and Plantation Agencies Ltd managed estates for absentee or passive landowners, who retained ownership while benefiting from professional oversight and steady income. Today, this model could be reimagined. Larger plantation companies could enter structured management agreements with smaller estate owners, offering agronomic expertise, mechanisation, replanting investment, and market access. In return, profit-sharing or fixed-return contracts would provide landowners with reliable income while improving land productivity and sustainability. For success, the agreements must be transparent, fair, legally sound, and scalable. Pilot projects and early adopters can serve as proof of concept, building trust and offering templates for broader adoption. 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