Golden Agri reports 1Q19 net profit rose 55 percent despite palm oil price decline

U.S. one-dollar currency notes; taken September 2018.U.S. one-dollar currency notes; taken September 2018.

Golden Agri-Resources reported Tuesday its first quarter net profit rose 55 percent on-year to US$18 million, mainly on the gain from disposing of an Indonesian subsidiary.

Revenue for the quarter ended 31 March fell 11 percent on-year to US$1.62 billion, the palm oil producer said in a filing to SGX before the market open.

However, earnings before interest, tax, depreciation and amortization (EBITDA) came in flat on-year at US$121 million, Golden Agri said.

“Declining palm oil prices continued to be the main factor affecting GAR’s performance this year, especially from the plantations and palm oil segment,” the company said. “Our integrated business model has helped GAR to withstand the price volatility with better performance from the downstream business.”

The average international crude palm oil (CPO) (FOB Belawan) price for the quarter was 20.6 percent lower on-year at US$512 per tonne, the filing said.

The plantation and palm-oil mills segment reported the quarter’s fruit yield was 4.6 tonnes per hectare, up 3 percent on-year.

The fresh fruit bunch and total palm product output for the quarter were 2.17 million tonnes and 629,000 tonnes, respectively, compared with 2.13 million and 612,000 tonnes respectively in the year-ago quarter, the filing said.

The increased production output partially offset the weaker CPO market prices, Golden Agri said.

“To sustain production growth, GAR is focusing on replanting older plantations with next-generation, higher yielding seeds as well as enhancing operational excellence through technological innovation,” the company said.

Total operating expenses fell 22.3 percent on-year to US$161.10 million, the filing said.

The palm, laurics and others segment, which includes processing and merchandising palm and oilseed-based products, posted an 11 percent decline in revenue to US$1.61 billion on weaker selling prices, partly offset by higher sales volume.

“This was mainly attributable to lower CPO prices and lower sales volume for oilseeds in China, which was offset by the strong demand for biodiesel in Indonesia,” Golden Agri said.

But the segment still reported EBITDA increased to US$59.3 million for the quarter, up from US$28 million in the year-ago period, on a higher EBITDA margin due to an additional contribution from biodiesel and the removal of an export levy in Indonesia.

In the outlook. Franky O. Widjaja, chairman and CEO, said palm oil market prices had gradually recovered on-quarter in the first quarter.

“We expect to see more positive development on biodiesel demand as the realization of the Indonesian biodiesel mandate during the first
three months of 2019 was on track,” Widjaja said in the statement.


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