SINGAPORE (Aug 14): Kencana Agri, the Crude Palm Oil (CPO) and Crude Palm Kernel Oil (CPKO) producer, has reversed to profitability in 2Q17 with earnings of US$7.1 million ($9.7 million) from a loss of US$6.7 million in 2Q16.
1H17 also saw Kencana Agri returning to the black with earnings of US$11.4 million from US$6 million a year ago.
Revenue fell 17.6% to $27.2 million from nearly $33 million due to lower CPO sales volume due to shipment delay offset by a slightly higher Average Selling Price (ASP) of CPO during the quarter. Sales volume of CPO decreased 24% from 48,106 MT in 2Q16 to 36,778 MT in 2Q17, whereas average selling price of CPO increased 1% from US$611 to US$616.
The group’s operating profit reversed to a profit of US$5.9 million in 2Q17 from a loss of US$3.6 million in 2Q16. The increase in operating profit was mainly due to fair value gain on biological assets of US$6.6 million.
However, during the quarter, the group disposed of its joint venture with the Louis Dreyfus Company Asia, resulting in a net gain on the disposal amounted to US$8.2 million. There was also lower interest expense and lower losses from share of results of joint venture. The decrease in interest expense was mainly due to higher mix of USD loans incurring interests at a lower rate than IDR loans.
Henry Maknawi, Chairman and CEO of Kencana Agri, says, “As the effect of El Niño wanes, we have seen our yields rebound significantly. We expect this recovery to be even stronger in the second half of the year. Prices however are expected to be volatile with some downward pressure due to higher production and rising soybean output. We will continue to focus our efforts on productivity and cost control in this challenging environment.”
Shares in Kencana Agri closed at 30 cents on Monday.
