Golden Agri's Q1 net profit rises 54.5% on one-off gain

A one-off gain gave earnings a healthy bump at Golden Agri-Resources in the first quarter, it reported yesterday.

Net profit rose 54.5 per cent to US$18.3 million (S$25 million) for the three months to March 31, from US$11.9 million a year ago. This was mainly from a US$11.5 million gain on the disposal of a subsidiary in Indonesia. Without it, operating profit fell 22.4 per cent to US$31.7 million.

Earnings per share stood at 0.14 US cent from 0.09 US cent a year ago. There was no dividend for the quarter, unchanged from the year before.

Revenue for the quarter dropped 11 per cent to US$1.62 billion due to softer crude palm oil prices. Decreases in turnover were also seen across all segments.

The plantation and palm oil mills segment saw sales fall 10.2 per cent to US$307.8 million, mainly due to lower palm oil prices, partially offset by higher sales volume.

Its palm, laurics and others segment recorded a 10.8 per cent dip in revenue to US$1.61 billion, also from lower palm oil prices and reduced sales of oilseeds in China. This was offset by "strong demand" for biodiesel in Indonesia, the group said.

Chairman and chief executive Franky O. Widjaja said the first quarter saw a "gradual recovery" in palm oil prices compared with the fourth quarter of last year.

"We expect to see more positive development on biodiesel demand as the realisation of the Indonesian biodiesel mandate during the first three months of 2019 was on track," he added.

The group said weather conditions, supply and demand for palm oil and other competing seed oils, and developments in government policy of the countries it operates in or trades with will continue to have an impact on commodity prices.

It expects the demand growth for palm oil to "remain stable", underpinned by global food and energy demand, particularly the rise in biodiesel consumption in Indonesia.

OCBC Investment Research is maintaining its "hold" rating for the Indonesian palm oil company, with a fair value estimate of 29 cents.

Golden Agri-Resources shares closed unchanged at 27.5 cents after the results were out yesterday.

A version of this article appeared in the print edition of The Straits Times on May 15, 2019, with the headline 'Golden Agri's Q1 net profit rises 54.5% on one-off gain'. Subscribe