Halcyon Agri guides for 2021 profit

Rubber bicycle tyre; taken September 2018.Rubber bicycle tyre

Halcyon Agri Corp. guided Tuesday that it expected to report a profit after tax in 2021, swinging from a significant loss for the previous year. 

“The expected PAT was mainly attributable to the overall improvement in business conditions, particularly the recovery of downstream industrial activities. The group has been able to capitalise on the robust demand and continuous improvement in its market position that accelerated business growth,” the company said in a filing to SGX. 

For the first half of 2021, Halcyon Agri reported a net profit of US$759,000, swinging from a year-earlier loss of US$40.38 million. Revenue for the January-to-June period rose 49.6 percent on-year to US$1.15 billion, the company said. 

In its voluntary update for the third quarter, Halcyon Agri said its earnings before interest, tax, depreciation and amortization (ebitda) came in a US$9.7 million, compared with US$12.4 million in the year-ago quarter and US$3.8 million in the second quarter of 2021. 

The voluntary third quarter update’s outlook said: 

“Natural rubber supply continues to be tight, due to Covid-19 resurgence and extreme weather patterns in certain areas. Demand outlook remains positive in the near term and China is expected to restock its depleting natural rubber stockpile. The mismatch in supply and demand propelled natural rubber prices to an intraday high of around US$1,900 per MT on 21 October, the highest in nearly eight months, and the tight supply conditions are expected to continue to drive the natural rubber prices even higher.”

Year-earlier losses

In its 2020 annual report, the rubber producer had pointed to the Covid-19 pandemic as hitting its results.

“Commodity prices, including natural rubber, have been highly volatile and presenting significant challenges to all stakeholders in the natural rubber value chain: Plantations, smallholder farmers, manufacturers and tyremakers,” Halcyon Agri said in the 2020 annual report. 

The report said that in the first half of 2020, operations faced a “sharp decline in demand from global tyre makers,” although there was some recovery in the second half of that year.

“The collapse in rubber prices in the first half, alongside a global economy catastrophe, caused a severe margin compression for the industry, and the prices was well below the breakeven costs of our plantations,” while underutilised processing capacities were unable to cover fixed operating costs, the company had said.

The company reported an operating loss of US$31.3 million for 2020.

Halcyon Agri said it was still finalising its results for 2021. 

 


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