Kencana Agri swings to 1Q19 net profit on fair-value gain

Palm kernels at a plantation in IndonesiaPalm kernels at a plantation in Indonesia

Kencana Agri reported Tuesday a first quarter net profit of US$602,000,  swinging from a year-earlier loss of US$9.85 million, on fair-value gains on biological assets and the Indonesian rupiah strengthening against the U.S. dollar.

Revenue for the quarter ended 31 March dropped 26.8 percent on-year to US$20.50 million, mainly on a lower average selling price of crude palm oil (CPO), partly offset by higher sales volume, the palm-oil producer said in a filing to SGX.

The average selling price for CPO fell 29 percent on-year to US$424, while sales volume rose around 4 percent, it said.

Fair value changes of biological assets and other receivables surged to US$3.05 million, from US$157,000 in the year-ago quarter, Kencana Agri said.

The company reported a US$3.21 million gain on foreign exchange, compared with a year-ago loss of US$3.62 million.

Kencana Agri issued a cautious outlook.

“While prices have recovered slightly from its lows of the fourth quarter of 2018, it is still at a relatively low level historically. The strong production and weak demand in 2018 resulted in a build-up of inventory which will limit any upward movement in prices until it is drawn down to a lower level,” Henry Maknawi, chairman of Kencana, said in the statement.

He said he didn’t see a resolution of U.S.-China trade tension happening anytime soon, adding “we expect commodity prices to remain volatile… and are optimistic that the biodiesel program in Indonesia will provide support to prices.”

 

While you’re here, we’re hoping you can help us out.

Shenton Wire has been providing you with quick news and market analysis. Help us continue to bring you the news you’ve come to expect and to expand our reach beyond Singapore.

Your monthly contribution will directly fund our journalism.

S$2     S$4       S$8

S$18       S$28       S$88

You can check your existing account here. You can also contact us about other contribution levels or for corporate subscriptions and syndication queries.