Indofood Agri Resources reports 3Q18 net loss amid weak commodity prices

Indonesian rupiah notesIndonesian rupiah notes

Indofood Agri Resources reported on Wednesday a third quarter net loss of 18.27 billion rupiah, swinging from a year-ago net profit of 113.71 billion rupiah as weak commodity prices hit the plantation division.

Revenue for the quarter ended 30 September was up 0.6 percent on-year to 3.71 trillion rupiah, it said in a filing to SGX before the market open on Wednesday.

“The poor performance was mainly due to the fall in sales and profit in Plantation Division arising from weak commodity prices and timing in shipment,” Indofood Agri Resources said. “The group’s performance was further affected by foreign currency loss arising from weakened Indonesian rupiah.”

The foreign exchange loss increased 83.2 percent on-year to 39.33 billion rupiah from 21.47 billion rupiah in the year-ago period, mainly on the weaker rupiah against the U.S. dollar, it said. IndoAgri said it reduced its U.S. dollar loan exposure by repaying certain U.S. dollar loan facilities in 2018.

The plantation division reported sales fell 11 percent on-year in the quarter to 2.24 trillion rupiah on lower average selling prices of agriculture cross and lower sales volume for crude palm oil (CPO) and palm kernel related products due to shipment timing, IndoAgri said. It noted there as an around 84,000 MT of CPO inventory buildup in the nine-month period, compared with an around 27,000 MT inventory drawdown in the year-ago period.

The impact of the plantation segment was partially offset by a “strong” performance from the edible oils and fats (EOF) division, which reported sales rose 24 percent on-year in the quarter to 2.80 trillion rupiah, the filing said.

Outlook

IndoAgri issued a mixed outlook.

“The uncertainties surrounding global growth and China’s trade tensions with the U.S. continue to put pressure on agricultural commodity prices,” it said.

But it added, “As a diversified and vertically integrated agribusiness with a dominant presence in Indonesia, our operations continue to be supported by a positive domestic economic outlook and large domestic palm consumption.”

In addition, it noted Indonesian palm oil demand was likely to be supported by the roll-out of the B20, or 20 percent, biodiesel blending in September.

 

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