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RAM Ratings affirms KLK’s AA1/Stable IMTN programme ratings
Published on 28 Nov 2025.
RAM Ratings has affirmed the AA1/Stable ratings of Kuala Lumpur Kepong Berhad’s (KLK or the Group) Islamic Medium-Term Note Programmes (IMTN) (Table 1), reflecting the Group’s consistently strong business fundamentals.
KLK, one of Malaysia’s largest plantation groups, benefits from diversified and integrated operations that underpin its stable earnings and operational resilience despite market challenges. Enhanced agronomic practices and cost efficiencies continue to support performance, despite adverse weather conditions. However, these strengths are moderated by the challenging operating environment for its midstream and downstream businesses, as well as persistent volatility in crude palm oil (CPO) prices.
The ratings also factor in expectations of medium-term recovery in KLK’s financial metrics back to RAM’s rating thresholds. This recovery is expected to be underpinned by tapering capital expenditure, a slower pace of acquisitions and improved performance in the oleochemical segment. Notably, KLK reported strong results for the 9M FY Sep 2025, with revenue and pre-tax profit growing by 13.1% and 26.5% y-o-y, respectively. These gains were driven primarily by increased contributions from the plantation segment, supported by favourable CPO and palm kernel prices, which offset weaker downstream performance. However, we note that the Group’s capacity to take on additional debt is constrained at the current rating level, unless supported by stronger operating cash flow.
KLK’s gearing ratio was 0.81 times as at end-June 2025, exceeding our projection. This was mainly due to short-term borrowings used to finance increased working capital for manufacturing segment. Crucially, the Group’s net-of-cash credit metrics remain within expectations and should gradually align with RAM’s rating thresholds over the next two financial years, supported by stronger upstream performance and potential earnings upside from the Group’s recently completed oleochemical manufacturing facilities.
Analytical contacts
Chew Wei Li
(603) 2708 8301
weili@ram.com.my
Thong Mun Wai
(603) 2708 8255
munwai@ram.com.my
Media contact
Sakinah Arifin
(603) 2708 8212
sakinah@ram.com.my
The credit rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security’s market price or its suitability for a particular investor, nor does it involve any audit by RAM Ratings. The credit rating also does not reflect the legality and enforceability of financial obligations.
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Similarly, the disclaimers above also apply to RAM Ratings’ credit-related analyses and commentaries, where relevant.
Published by RAM Rating Services Berhad
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