UPDATE: Indofood Agri swings to 4Q18 net loss as palm oil prices hit by US trade war

Indonesian rupiah notesIndonesian rupiah notes

This article was originally published on Thursday, 28 February 2019 at 8:45 A.M. SGT; it has since been updated with more details. 

Indofood Agri reported on Thursday it swung to a fourth quarter net loss after tax of 362 billion Indonesian rupiah, or S$34 million, from a year-ago net profit, as the U.S. trade war denting palm oil prices.

Revenue for the quarter ended 31 December was 3.80 trillion rupiah, or S$359 million, up 7 percent on-year, it said in a filing to SGX before the market open.

“Despite higher production, the fourth quarter of 2018 reported net loss mainly due to significantly lower plantation profit on weak commodity prices and a one-off business combination impact,” IndoAgri said in the statement.

Crude palm oil (CPO) price CIF Rotterdam averaged US$601 a tonne in 2018, compared with US$717 in 2017, IndoAgri said.

“This was due to the ongoing China-U.S. trade war, the Chinese government has put tariffs on U.S. soybeans and caused soybean prices to tumble,” it said. “Along with the decreasing soybean prices, rising production and higher year end-stocks against a weakening global demand for palm oil have put CPO prices under pressure.”

The plantations segment posted revenue of 2.50 trillion rupiah for the fourth quarter, down 0.9 percent on-year as lower prices offset higher production.

The fresh fruit bunches (FFB) nucleus and CPO production were up 17 percent and 20 percent on-year, respectively, in the fourth quarter, Indofood Agri said.

Edible oils and fats segment reported revenue of 2.67 trillion rupiah for the quarter, up 3.5 percent on-year.

For the full year, IndoAgri reported a net loss after tax of 427 billion rupiah, or S$40 million, swinging from a year-ago net profit after tax of 653 billion rupiah, or S$62 million, on revenue of 14.06 trillion rupiah, or S$1.33 billion, down 11 percent on-year. Full-year results were also hurt by a weaker Indonesian rupiah, it said.

In its outlook, IndoAgri said it expected the U.S.-China trade tensions, which have been putting price pressure on agricultural commodities, would keep palm oil prices volatile.

But it added, “our operations continue to be supported by the large domestic consumption and economic conditions in Indonesia,” and pointed to the country’s adoption of a biodiesel program this year for 20 percent blending.



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