SINGAPORE (Aug 15): Golden Agri-Resources (GAR) sank deeper into the red with a net loss of US$46.4 million ($64.4 million) for the 1H19 ended June, widening from a net loss of US$27.2 million a year ago.
The group reported an underlying loss of US$15.3 million for 1H19, compared to an underlying profit of US$41.3 million a year ago.
1H19 revenue fell 13.9% to US$3.17 billion, from US$3.68 billion a year ago. The decline in revenue was led by a 13.6% drop in revenue from its palm, laurics and others segment to US$3.15 billion in 1H19.
The segment, which deals in the processing and merchandising of palm and oilseeds products, oleo-chemicals and other vegetable oils, as well as production and distribution of other consumer products in China and Indonesia, accounted for some 99% of total group revenue in 1H19.
The lower palm, laurics and others revenue was mainly attributable to lower crude palm oil (CPO) prices and lower sales volume for oilseeds in China, partially offset by strong demand for biodiesel in Indonesia.
Despite lower prices, EBITDA for the segment more than doubled to US$100.4 million in the current period, from US$40.4 million in 1H18, on the back of better EBITDA margin mainly due to additional contribution from biodiesel and the removal of export levy in Indonesia.
Revenue from its plantation and palm oil mills segment decreased by 16.1% to US$573.9 million in 1H19, mainly attributable to lower CPO prices.
EBITDA from the plantations and palm oil mills segment fell 51.0% to US$96.7 million in 1H19, compared to US$197.2 million a year ago.
Gross profit came in at US$344.6 million in the first half, some 26.4% lower than a year ago.
Total operating expenses shrank 20.7% to US$323.4 million during the first half, led by a 33.0% drop in selling expenses to US$173.2 million.
As at end June, cash and cash equivalents stood at US$102.3 million.
Looking ahead, the group says it expects production growth to slow down given the age profile of the industry and cyclicality of fruit production, while the demand growth for crude palm oil is expected to remain stable.
It adds that weather conditions, supply and demand for CPO and other competing seed oils, as well as developments in government policy of the countries it operates in or trades with will continue to have an impact on the prices for commodities.
The group says it will continue to enhance its integrated operation capabilities in an efficient and innovative way, so as to optimise profit opportunities across the value chain, as well as to improve its yield, cost efficiency and sustainability initiative.
As at 12pm on Thursday, shares in Golden Agri-Resources are trading flat at 29.5 cents.
