SINGAPORE (May 15): Golden Agri-Resources has posted earnings of US$37.5 million ($52.2 million) for the 1Q ended March 31, declining 60.1% from the US$94.1 million earnings announced in the preceding year.
This comes in spite of a 37% improvement in revenue for the quarter at US$2.05 billion, as compared to US$1.5 billion a year ago.
The higher overall revenue was primarily due to higher average crude palm oil (CPO) prices and the recovery in palm production which led to an increase from contributions across all segments except for ‘others’, which refers to the production and distribution of food & consumer products in China and Indonesia.
Revenue from plantations and palm oil mills grew 56.4% to US$475.2 million on higher average CPO price and production yield, while revenue from the palm & laurics and grew 47% to US$1.8 billion on higher sales volume and higher average net realised prices.
At the same time, revenue from the oilseeds segment grew 5.7% to US$187.3 million on the back of higher average net realised prices.
The surge in group revenue was offset by higher expenses including a 3.2% growth in total operating expenses to US$214.9 million, as well as 10.2% higher financial expenses of US$35.5 million, in line with higher average borrowings.
A net foreign exchange loss of US$1.2 million was also recorded over the quarter as compared to a net gain of US$51.9 million in 1Q16, due to the translation gain on IDR-denominated monetary assets as the IDR strengthened significantly against the USD in the previous period – in addition to fair value gain on forward foreign currency contracts used to hedge the currency exposure of MYR and IDR.
As at March 31, Golden Agri’s total assets grew to US$8.4 billion from US$8.3 billion in end-2016.
Inventories grew to US$1 billion, US$63.6 million higher than a year ago due to higher inventories level for the group’s downstream operations in China.
In its outlook, the group says it will continue to be affected by prices of CPO and competing seed oils, fluctuating foreign currency exchange rates, and weather conditions – but expects the palm oil industry to benefit from the increasing demand, particularly the domestic consumption growth through the implementation of the biodiesel policy in Indonesia.
“We continue to take advantage of Golden Agri’s combined strengths in the upstream and downstream businesses to pursue positive market developments. For the rest of the year, we expect performance to be supported mainly by increasing production volume,” says Franky Widjaja, chairman and CEO of the group.
Shares of Golden Agri closed flat at 38 cents on Monday.
