Global Palm Resources reports 2Q18 net profit tumbled 67 percent amid lower palm oil prices

Global Palm Resources reported on Monday that its second quarter net profit tumbled 67 percent to 2.503 billion rupiah, or around S$235,507 or US$171,099, amid lower crude palm oil prices and sales and higher expenses.

Revenue for the quarter ended 30 June fell 19 percent on-year to 81.773 billion rupiah, mainly on lower crude palm oil (CPO) and palm kernel sales volume and lower average CPO selling prices, it said in a filing to SGX on Monday after the market close.

The average CPO selling price fell by 2 percent on-year to 7,529 rupiah per kilogram in the second quarter from 7,6258 rupiah per kilogram in the year-earlier period, it said. CPO sales volume fell by 17 percent on-year to 9,507 tons in the quarter from 11,505 tons in the year-earlier period, while palm kernel sales volume fell to 2,000 tons in the second quarter from 3,003 tons in the year-earlier period, it said.

CPO sales revenue fell 19 percent on-year in the quarter to 71.6 billion rupiah, mainly on the lower CPO sales volume and average selling price, it said. Palm kernel sales revenue fell 15 percent on-year in the quarter to 10.2 billion rupiah, as the decrease in sales volume was offset by a higher average selling price of 5,094 rupiah a kilogram, up from 3,995 rupiah a kilogram in the year-earlier period, it said.

“The decrease in CPO sales volume was influenced by unfavorable market and logistics conditions, coupled with lower productions that resulted from the group’s recent replanting program,” Global Palm Resources said in the filing.

Foreign exchange gains

It posted a net foreign exchange gain of 2.41 billion rupiah in the quarter, compared with a foreign exchange loss of 905.45 million rupiah in the year-earlier period, mainly on the strengthening of the Singapore and U.S. dollars against the rupiah, due to the company’s U.S. dollar and Singapore dollar bank balances.

Interest income fell 18 percent on-year in the quarter to 2.76 billion rupiah, from 3.39 billion rupiah in the year-earlier quarter, on lower interest earned from bank deposits and lower interest from the plasma plantation receivables, it said.

Administrative expenses increased by 12 percent on-year to 10.35 billion rupiah, mainly on higher salaries and wages and higher professional fees, it said.

Other expenses surged 809 percent on-year in the quarter to 1.4 billion rupiah, mainly on provision for the Plasma loan impairment of 1.1 billion rupiah, Global Palm Resources said.

In the first half, net profit fell 91 percent on-year to 3.2 billion rupiah, while revenue fell 27 percent on-year to 180.5 billion rupiah, it said.

In its outlook, the company was cautiously upbeat.

“CPO prices are expected to remain within the current price range given the supply situation and the uncertainty in the global economy and abnormal weather’s affect on market dynamics,” Global Palm Resources said in the statement. “The demand for palm oil is expected to be well supported in view of rising food requirements from China, India, Indonesia and emerging markets, as well as demand from the biofuel, oleochemicals and compound feed industries.”

Global Palm Resources said it would speed up the replacement of its older palm trees with a newer breed of higher-yielding palm trees, which it expected would spur a higher yield per hectare when the trees reach maturity.

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