SINGAPORE (Feb 27): Golden Agri-Resources has sunk into a 4Q17 loss of US$29.1 million ($38.3 million), compared its profit of US$46.3 million posted in the same period a year ago on lower revenue and share of joint ventures, forex losses as well as a one-off impairment loss.
Revenue for the quarter fell 10% to US$1.9 billion from US$2.1 billion in 4Q16.
A US$1.5 million loss from share of results of joint ventures was also registered compared to US$0.6 mil in profit a year ago due to losses from a joint venture that began commercial operations in 4Q17.
Over the quarter, the group also booked forex losses of US$17.8 million compared to a loss of US$3.3 million a year ago due to translation loss on its IDR-denominated monetary assets, following the weakening of IDR against USD.
Under exceptional items, a US$19.7 million impairment loss on disposal group held for sale was incurred whereas there was none in 4Q16.
For FY17, Golden Agri’s earnings fell 81.5% to US$74 million compared to earnings of US$399.6 million in the previous year, which the group mainly attributes to the absence of deferred tax credit.
This comes despite a 4.1% growth in revenue to US$7.5 billion from US$7.2 billion in FY16, driven mainly by higher revenue from the plantations & palm oil mills and palm & laurics segments.
The average international CPO price for the current year was US$682 per tonne, as compared to US$664 per tonne in the previous year.
Notably, fresh fruit bunch (FFB) and total palm product output for the current year improved to 9,607,000 tonnes from 8,880,000 tonnes previously, and 2,724,000 tonnes from 2,510,000 tonnes, respectively, as the impact of severe El Nino weather condition subsided.
Revenue contributions from the oilseeds business however fell 12.2% to US$661 million compared to US$752.6 million a year ago on the back of lower volume and higher input prices.
Looking ahead, Golden Agri says its operating performance will continue to be affected by the prices of CPO and competing seed oils, fluctuating foreign currency exchange rates and weather conditions.
It nonetheless expects CPO prices to remain stable supported by global demand growth, including the implementation of the biodiesel mandate in Indonesia.
The group says it will continue to enhance its integrated operation capabilities to optimise profit opportunities across the value chain, as well as to improve its yield, cost efficiency and sustainability initiatives.
A final dividend of 0.116 cent has been declared.
In addition to an interim dividend of 0.693 cent per share distributed in Nov 2017, this brings the total dividend for FY17 to 0.809 cent, in line with the group’s dividend policy to distribute 30% of its underlying profit.
Looking back on the last financial year, Franky Widjaja, chairman and CEO of the group, highlights resilient CPO market prices which have supported the group’s favourable upstream business as well as downstream performance, which has been doing well in both Indonesia and India.
He nonetheless recognises that the China oilseed business remains competitive.
“We have a positive view on CPO price and the industry outlook as we enter the low production season with demand continuing to be robust. GAR’s business strategy is focused on breakthrough transformation initiatives based on technology, innovation and sustainability across the business value chain, with a view towards enhancing our competitive edge,” says Widjaja.
Shares in Golden Agri closed flat at 36 cents on Monday.
