Kencana Agri has reported earnings of US$10 million ($13.6 million) for 1HFY2021 ended June, 24.5 times higher than the US$0.41 million recorded for the corresponding period the previous year.
The increase was mainly driven by a fair value gain recognised on biological assets and plasma receivables amounting to US$8.3 million.
Revenue increased marginally to US$63.8 million for the 1HFY2021, up 3.5% y-o-y on the back of higher crude palm oil (CPO) and palm kernel (PK) selling prices.
However, sales volume in 1HFY2021 was lower than 1HFY2020 mainly driven by lower CPO production in palm oil mills as a result of the Covid-19 pandemic which disrupted labour supply and lower trading activities.
See also: Kencana Agri sells Singapore property for US$2.3 mil
The group’s gross profit for the 1HFY2021 came in at US$22.6 million, up 14.9% y-o-y, which it attributes to efficiency measures taken in the plantations and palm oil mills. Gross profit margins increased to 35.4% for the period, up 3.5 percentage points from the previous year.
The group recorded an operating profit of US$25 million and a net profit of US$10 million, driven by the higher gross profit, the increase in biological assets due to better commodity price and lower distribution cost.
Kencana Agri reported an increase in biological assets amounting to US$7.1 million due to higher estimated FFB production with better selling price and foreign exchange difference of US$0.7 million.
“CPO price was bullish in first half of 2021 in the light of the uncertainty in supply caused by the Covid-19 pandemic coupled with the unfavourable pattern of weather, stronger edible oil and crude oil prices. Covid-19 outbreak is expected to continue disrupting the operating activity, however, we believe that the strong demand of CPO may cushion the impact. We will focus on the safety of our employees and continue to focus our efforts on improving our productivity and costs efficiency in our core business,” says Henry Maknawi, chairman of Kencana.
For more stories about where the money flows, click here for our Capital section
As at 10.06am, shares in Kencana Agri are up 2 cents or 13.33% higher at 17 cents.
