Singapore-listed palm oil company Golden Agri-Resources' fourth-quarter underlying profit fell 44 per cent from the same period a year ago, and revenue declined as production volume and crude palm oil (CPO) prices dropped.
The company posted an underlying profit, which excludes non-operating items, of US$37 million (S$48.8 million) for the three-month period ended December, compared with US$66 million a year ago. Full-year underlying profit rose 36 per cent to US$254 million.
Quarterly revenue fell 10 per cent. Fourth-quarter CPO production fell 26 per cent from the same period a year ago, which the firm attributed to a large base effect after a sharp gain in fourth-quarter 2016 production as palm growth rebounded from the 2015 El Nino weather phenomenon. Full-year CPO output rose 8 per cent versus 2016.
Including an impairment loss on China assets and other non-operating items, Golden Agri posted a net loss of US$29 million in the fourth quarter. Last year, it agreed to sell its oilseed crushing and vegetable oil refining business in China to global trading house Louis Dreyfus Co. Full-year net profit was US$74 million, down 81 per cent from a year ago.
Golden Agri's plantation output this year may rise faster than a forecast 8 to 9 per cent increase for the broader industry, Mr Franky Widjaja, its chairman and chief executive, told reporters at its results briefing. He said palm oil prices are expected to stabilise and improve by US$50 to US$80 per tonne this year, citing industry consensus.
Earlier this year, European Union lawmakers unveiled draft rules that included banning palm oil in motor fuels from 2021. Mr Widjaja said that while there was little current impact on demand from the potential ban, the industry was worried about the effect beyond 2020. Europe accounts for 15 per cent of the firm's exports, Golden Agri said.
Golden Agri shares yesterday ended unchanged at 36 cents and are down 2.7 per cent year-to-date.
AT A GLANCE
REVENUE: US$7.51 billion (+4.1%)
NET PROFIT: US$74 million (-81.5%)
TOTAL DIVIDENDS PER SHARE: 0.809 cent (+27.4%)