SINGAPORE (May 15): Golden Agri-Resources reported a 68% drop in 1Q18 earnings ended March to US$12 million from US$38 million a year ago.
Revenue declined to US$1.8 billion from US$2 billion a year ago corresponding to decreases in both palm production and CPO prices.
EBITDA was down 34% to US$121 million, while underlying profit fell 70% to US$25 million.
GAR says palm product output in the first quarter 2018 decreased both year-on-year by 12% to 612,000 tonnes due to unusually high production last year in relation to the recovery from El Niño phenomenon in 2015.
Furthermore, several estates in southern part of Kalimantan and Sumatra are still impacted by the prolonged drought condition.
Coupled with lower CPO prices, EBITDA for palm product output was weaker at US$95 million.
Meanwhile, the palm and laurics segment saw margin compression with EBITDA reaching US$25 million with a margin of 1.6% due to recent government intervention in commodity markets, specifically Malaysia and India.
The oilseed and food business in China continued its positive contribution to the company’s EBITDA amid the competitive market environment. The segments reached a combined EBITDA of US$2.8 million. Main contribution came from the oilseeds segment, which achieved a stronger EBITDA margin of 1.6%.
Franky Widjaja, GAR Chairman and CEO, says: “First quarter 2018 was a challenging period for the palm oil industry. Industry experts are also concerned about a production surplus in the second half of the year, due to seasonality and low production in the first quarter. However, we believe CPO prices will be supported by growing food demand as well as from increasing biodiesel usage. Over the long term, we believe demand for palm oil will remain strong, and the industry is well positioned to ride out occasional periods of volatility.”
Shares in Golden Agri-Resources closed 0.5 cent lower at a 36 cents on Monday.
