Palm oil prices have almost doubled in the past year on rising demand from China and India and increased use of crude palm oil as an alternative energy source. Kuala Lumpur-based IOI, one of Malaysia’s largest plantation operators, is a major beneficiary of the higher prices.
IOI’s stock climbed 8% on March 12 after Ruchi Soya Industries, India’s largest importer of edible oils, said the Indian government could cut import duties on the oils by more than 10%.
Meanwhile, China is looking to increase supplies of palm oil after price curbs imposed in January reduced retail stockpiles.
IOI is the most profitable company in the palm oil sector, with higher yields and lower costs than its competitors. IOI’s pretax profits rose 64.7% to $438 million in the six months ended December 31, 2007, on a 59% jump in revenue from the same period a year earlier.
The company, which also has interests in property development, is seeking to acquire privately held firms in the US and Indonesia. It sold $600 million of exchangeable bonds in January in what was the largest such offering by a Malaysian company since 2002, according to Citi, the sole bookrunner.
Gordon Platt
