Palm oil producer Kencana Agri reported on Monday it swung to a net loss of US$7.6 million in the second quarter, from a net profit of US$7.11 million in the year-earlier period as the weaker Indonesian rupiah spurred a foreign exchange loss and as crude palm oil (CPO) prices fell.
Revenue for the quarter ended 30 June rose 6.7 percent on-year to US$29.34 million, mainly as higher sales volume offset a lower average selling price of CPO, it said in a filing to SGX after the market close on Monday.
CPO sales volume rose around 15 percent on-year in the quarter to 42,338 MT, while the average selling price fell 12 percent on-year to US$553, from US$626 in the year-earlier period, it said.
The foreign exchange loss in the quarter was US$9.48 million, compared with a foreign-exchange loss of US$259,000 in the year-earlier quarter, it said.
Kencana Agri also said that its share of results from equity-accounted joint ventures posted a loss of US$1.09 million, compared with a year-earlier loss of US$156,000.
In the first half, Kencana Agri posted a net loss of US$17.45 million, swinging from a year-earlier net profit of US$11.37 million, while revenue declined 14.8 percent on-year to US$57.33 million.
In the outlook statement, Chairman and CEO Henry Maknawi noted that fresh fruit bunches (FFB) production “rebounded strongly” and nearly doubled on-quarter in the second quarter, helping to mitigate the effect of falling CPO prices.
“We expect this recovery in production to continue and extend into the remaining part of the year. CPO prices however are expected to remain volatile, affected by abundant supply,” he said. “The Indonesian government’s plan to bring forward the rollout of their B30 biodiesel programme to 2019 is likely to support CPO prices. In this challenging environment, we will focus our efforts on productivity and cost efficiency.”