Golden Agri returns to profitability in Q1

A worker harvesting fruit from oil palm trees in a village in Sumatra. Revenue from Golden Agri-Resources' plantation and palm oil mill segment fell 10.9 per cent to US$303.8 million, mainly affected by lower crude palm oil prices and production.
A worker harvesting fruit from oil palm trees in a village in Sumatra. Revenue from Golden Agri-Resources' plantation and palm oil mill segment fell 10.9 per cent to US$303.8 million, mainly affected by lower crude palm oil prices and production.PHOTO: AGENCE FRANCE-PRESSE

Stronger sales, better margins help palm oil producer turn around

Palm oil producer Golden Agri-Resources has posted a healthy first-quarter net profit of US$94.1 million (S$129.3 million), reversing from a net loss of US$3.2 million a year earlier.

This was thanks to an increase in sales volume and margin improvement in downstream operations, which mitigated the impact of softer crude palm oil (CPO ) prices during the period, the company said.

Revenue for the three months to March 31 fell 3.8 per cent to US$1.49 billion. Revenue from its plantation and palm oil mill segment fell 10.9 per cent to US$303.8 million, mainly affected by the lower CPO prices and production.

Fresh fruit bunch and total palm product output were also lower at 1.87 million tonnes and 554,000 tonnes respectively, compared with 2.11 million tonnes and 634,000 tonnes a year earlier. This was due to the prolonged dry conditions brought on by El Nino.

Revenue from its palm and laurics segment fell 9.9 per cent to US$1.26 billion, mainly from lower prices despite higher sales volume achieved, especially in destination markets, the company said.

However, earnings from this segment rose due to continued improvement in margins.

Revenue from its oilseed segment rose by 30.6 per cent to US$175.6 million in the quarter, mainly due to an increase in crushing volume. "The oilseed business environment in China remained favourable," the company said.

  • AT A GLANCE

  • REVENUE: US$1.49 billion (-3.8%)

    NET PROFIT: US$94.1 million (up from net loss of US$3.2 million)

    DIVIDEND: N/A

Selling expenses, which comprise mainly transportation and freight, export tax and levy, advertising and promotion expenses and salaries, rose 50.4 per cent to US$152.1 million in the period due to higher export levy incurred in Indonesia and higher freight costs and promotion expenses, in line with the larger sales volume for the palm and laurics segment.

Earnings per share for the period was 0.74 US cent, compared with loss per share of 0.03 US cent a year earlier.

Net asset value per share was 30 US cents at March 31, up from 29 US cents at Dec 31.

The company said its production will be negatively affected by the El Nino weather condition, although the impact may be mitigated by higher CPO prices, resulting from tighter supply and increased domestic demand following Indonesia's biodiesel programme.

"Our expanded downstream assets have supported (the company) during this difficult period, resulting in a good set of results for the company," chairman and chief executive Franky O. Widjaja said in a statement.

It will stay focused on value chain optimisation across its integrated business model, he added.

The counter closed one cent higher at 37 cents yesterday.

Its results were posted after markets closed.

A version of this article appeared in the print edition of The Straits Times on May 14, 2016, with the headline 'Golden Agri returns to profitability in Q1'. Print Edition | Subscribe