KL Kepong to buy Dutch chemical company

Kuala Lumpur Kepong Bhd (KL Kepong) is proposing to buy Elementis Specialities Netherlands BV (ESN) in Delden, the € Netherlands for 39mil or RM187.2mil.

In a filing with Bursa Malaysia yesterday, the plantation company said its unit Kolb Distribution AG had inked a deal with Elementis BV to acquire its entire interest in ESN, together with its working capital, assets and surfactant chemicals business.

The proposed acquisition will be funded by a combination of KL Kepong’s existing cash reserves and bank borrowings, the company said, adding that the proposed acquisition is expected to be completed in the first half of 2018.

“The Delden site will expand the existing Kolb business portfolio in terms of product range and market coverage. The use of the Delden site as another hub for the KLK Group’s market penetration strategy will further accelerate growth in the group’s downstream chemical specialities business in Europe.

“The Delden production site is serviced by good rail and road links and is located strategically close to key customers and raw material supply routes.”

KL Kepong said the proposed acquisition will not have any effect on its issued and paid-up share capital as the acquisition is to be settled in cash.

For its fourth quarter ended Sept 30, 2017, KL Kepong’s net profit dropped to RM242.12mil from RM375.06mil in the previous corresponding period, while revenue increased to RM5.16bil from RM4.54bil a year earlier.

For its financial year ended Sept 30, 2017, the company’s net profit fell to RM1.07bil from RM1.68bil in the previous corresponding period, while revenue rose to RM21bil from RM16.51bil a year earlier, boosted by higher profits from its plantation sector.

The company said crude palm oil (CPO) prices were recently supported by a slower-than-expected recovery in fresh fruit bunch production post El-Nino, resulting in tighter inventory than envisaged.

“Going forward, 2018 palm oil production is projected to recover strongly and coupled with an environment of ample supply of oil seeds, this may put pressure on CPO prices.

“Notwithstanding these factors, we expect our plantations’ profit for financial year 2018 to be satisfactory,” said KL Kepong, adding that the performance of the oleochemical division should improve from last year’s results.

The company said management’s efforts to turn around the under-performing business units have produced encouraging results. “Overall, the company’s profits for the financial year 2018 should be better.”

Source: The Star