Golden Agri-Resources reports 3Q21 swung to net profit as palm oil prices rose

A palm oil tree at a plantation in IndonesiaA palm oil tree at a plantation in Indonesia
  • Golden Agri-Resources swung to a net profit for the third quarter
  • Crude palm oil (CPO) prices climbed in the January-to-September period
  • Traceability of Golden Agri’s supply chain, a sustainability practice, is improving

Golden Agri-Resources reported Friday its third quarter swung to a net profit of US$115 million from a year-ago net loss of US$5 million amid a sustained increase in palm oil prices and strong production.

Revenue for the July-to-September period grew 76 percent on-year to US$2.83 billion, the palm-oil producer said in a filing to SGX.

Third quarter earnings before interest, tax, depreciation and amortisation (ebitda) increased 145 percent on-year to US$305 million, Golden Agri said. Ebitda also excludes changes in fair value of biological assets, foreign exchange gains and losses and exceptional items.

For the January-to-September period, crude palm oil (CPO) market prices (FOB Belawan) increased 74 percent on-year, averaging US$1,110 a tonne, with an average net CPO price, excluding export tax and levy, of US$765 a tonne, up 31 percent on-year, Golden Agri said.

“The plantations and palm oil mills segment benefitted from the higher plantation output and continuing uptrend in CPO market prices. The performance of palm, laurics and others segment also continued to be favourable in line with the healthier business environment,” the company said.

Sustainability

On sustainability, Golden Agri said it had reached 94 percent traceability to plantation for the palm supply chain in the third quarter, and expected to reach 100 percent by end-year.

“Our effort has included the profiling of 91,910 independent smallholders through our Ksatria Sawit programme. Smallholder palm fruit enters our supply chain through a network of dealers and suppliers,” the company said.

“In order to improve their productivity and incomes while observing sustainable production practices, our field teams engage with these suppliers providing training, while collecting valuable data to help us achieve our dual objective of reducing deforestation while supporting economic development,” Golden Agri said.

Outlook

On its outlook, Golden Agri pointed to tight global vegetable oil supply and an ongoing La Nina weather event, which could impact supply in the short term.

“Extremely high rainfalls in Southeast Asia may hinder the oil palm harvesting process, while extreme drought could impact oilseeds production in South America and the United States. Meanwhile, demand has not been significantly affected despite high prices, as is reflected in the tight stock positions,” the company said.

“These factors are expected to support continued strong CPO market prices. Notwithstanding the more conducive market environment, we remain cautious of any uncertainties from the lingering global Covid-19 pandemic,” the company added.

Read more details of Golden Agri’s results.