Halcyon Agri Corporation is back in the black for the 1QFY2021 ended March, with EBITDA of US$14.1 million ($18.8 million), from EBITDA of negative US$3.7 million for the 1QFY2020.
Q-o-q, EBITDA surged 70.5 times from EBITDA of US$0.2 million for the 4QFY2020.
Coupled with the reduction in net financing costs, the group has achieved a profit before tax position for the 1QFY2021.
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Gross profits for the 1QFY2021 increased 79.3% y-o-y and 13.1% q-o-q to US$38.9 million, which is attributable to the group’s continued focus on margin optimisation and deploying “agile supply chain strategies”.
Gross profit per metric tonne (MT) stood 23.3% y-o-y and 32.3% q-o-q higher at US$127.
The higher figures were due to the “robust demand” for natural rubber, underpinned by the higher prices for natural rubber in the 1QFY2021.
Natural rubber prices closed at US$1,662 per MT in the 1QFY2021, representing a 60.1% y-o-y and 10.6% q-o-q increase. The last-closed price for the quarter came after a pullback from a four-year high of US$2,000 per MT in end-February 2021
The higher prices were due to pent-up demand following global lockdowns and tightened supply following early-wintering and above-normal rainfall in Southeast Asia.
Sales volume in the first quarter grew 9.2% y-o-y at 306,733 MT.
The recovery in the global economy, as well as the global shortage of shipping containers which caused strain on the international supply chains will provide “further tailwinds” for demand and prices for natural rubber in the near-to-middle term.
The company adds that it is “well-positioned” to leverage its strong presence in major rubber-producing regions.
Revenue for HRC Group increased by 30% y-o-y to US$371.6 million, contributed by higher volume and higher average selling prices (ASPs).
Gross profits for HRC Group increased by 44.9% y-o-y to US$25.8 million.
CMC Group saw a 15% growth y-o-y in revenue to US$147.3 million in the 1QFY2021 buoyed by higher ASPs.
SEE:Halcyon Agri acquires 4 rubber factories in Indonesia for $105 mil
Gross profit for CMC Group surged 3.4 times to US$13.1 million in the quarter from US$3.9 million in the year before, attributable to the group’s “strong presence” in Europe and the US.
“Since 2QFY2020, we have made remarkable progress in all aspects of our business. The 1QFY2021 financial results is a testament of this progress. On the back of the improving market sentiments, we are confident that the group is heading towards the right direction. Our integrated global supply chain has given us the opportunity to continue staying close to our customers in meeting their increased demands and requirements,” says Li Xuetao, CEO of the group.
“Natural rubber prices have risen sharply in the past months and is well above its pre-pandemic peak in February 2020. This is reflective of our earlier expectations of an increasingly robust downstream demand as the global economy reopens,” he adds.
However, he acknowledges that the uncertainty arising from the Covid-19 pandemic means that the growth trajectory for the global economy may be “potentially disrupted”.
“Notwithstanding this, we continue to see stable and improving stream of offtakes from our customers and the downstream factories are operating at full speed. This goes to show that nearterm demand outlook is looking positive. However, considering the fluid situation of the pandemic and that massive lockdowns remain possible, we are cautiously optimistic on the long-term prospects for natural rubber,” he says.
Shares in Halcyon Agri closed 0.5 cent higher or 1.9% up at 27 cents on May 17.
