SINGAPORE (Nov 14): Kencana Agri reported 3Q net losses narrowed to US$1.38 million ($1.9 million) from $5.9 million a year ago.
This came on the back of lower interest expense and lower losses from share of results of joint venture offset by an increase in foreign exchange loss as a result of the weakening IDR.
The decrease in interest expense was mainly due to higher mix of USD loans during the period incurring interests at a lower rate than IDR loans.
Revenue rose 58% to US$43.5 million from US$27.6 million a year ago mainly due to higher CPO sales volume offset by a lower Average Selling Price (ASP) of CPO during the quarter.
Sales volume of CPO increased 62% to 63,794 MT in 3Q17 from 39,412 MT in 3Q16 whereas ASP of CPO decreased 3% to US$588 from US$609.
Group operating profit reversed to a profit of US$6.4 million in 3Q17 from a loss of US$1.6 million in 3Q16 mainly due to higher sales volume which resulted in higher gross profit.
Henry Maknawi, Chairman and CEO of Kencana, says, “We have seen our FFB production rebound in 1H2017 as the effect of dry weather from El Niño diminished. This trend was more pronounced in 3Q2017 and we expect the recovery to continue into 2018.”
Overall, Maknawi expects Kencana Agri’s production of 2017 to surpass that of 2016 in total. However, prices are expected to be softer due to stronger supply brought about by the more favourable weather, weaker demand from China and the EU and the ample supply of soybean.
“We will continue to focus on productivity and cost efficiency in order to position ourselves well to take advantage of the recovery in yields,” he adds.
Shares in Kencana Agri closed 7 cents higher at 48 cents on Tuesday.
