Decline driven by increasing financial expenses due to higher interest rates and greater income tax expenses, says company

 

PALM oil producer Golden Agri-Resources : E5H -1.79% (GAR) posted an 18 per cent lower underlying profit of US$91 million for the third quarter of the 2024 financial year, from US$110 million in the second quarter.

 

In a bourse filing on Thursday (Nov 14), the company said that the decrease was driven by increasing financial expenses due to higher interest rates and greater income tax expenses, with more profits recorded in several subsidiaries operating in countries with higher income tax.

 

Revenue for the period grew 7 per cent to US$2.8 billion, from US$2.6 billion in Q2. This was driven by expanded sales volume and a slight increase in crude palm oil prices, which offset weaker plantation output.

 

Earnings for Q3 FY2024 stood at US$118 million, up 80 per cent from US$65 million in the previous quarter. This was mainly driven by the foreign exchange gain recorded in the latest quarter.

 

Revenue for the nine-month period ended Sep 30 was up 8 per cent at US$7.9 billion, from US$7.3 billion in the corresponding period a year prior.

 

Underlying profit for the time period was 15 per cent lower at US$279 million, from US$327 million in the previous year. Earnings for the nine months stood at US$220 million, 12 per cent lower than US$250 million in the same period in FY2023.

 

Fruit yield for the first nine months of 2024 fell to 12.8 tonnes from 14.4 tonnes per hectare in the same period in 2023, due to the impact from last year&rsquo s El Nino conditions and replanting preparation.

 

Recovery in production continued from Q2 of 2024 to Q3. However, palm-product output is still weak for the nine-month period at 1.9 million tonnes, compared with 2.2 million tonnes in the same period last year.

 

GAR expects the peak crop season to shift to the fourth quarter of this year.

 

The impact of El Nino in the second half of 2023 on Indonesia&rsquo s palm oil output was worse than initially estimated, the company noted. Crop losses due to unfavourable weather conditions have disrupted sunflower oil and rapeseed oil production.

 

While increases in the production of soybean oil have alleviated the supply crunch of global sunflower and rapeseed oils, prices remain elevated.

 

The markets are expecting a seasonally low production period for palm oil in the first half of 2025, when Indonesia is planning to implement an increased B40 biodiesel blending mandate.

 

Unpredictable weather and escalating geopolitical tensions remain key factors likely supporting vegetable oil prices.

 

GAR notes that the possibility of demand softening in the light of high prices in price-sensitive markets is an important factor to monitor.

Revenue for the period improves 10.4% to US$2.6 billion

 

MAINBOARD-LISTED Golden Agri-Resources : E5H 0% (GAR) posted a 27.8 per cent decrease in net profit to US$65 million for the three months ended June, down from US$90 million in the previous corresponding period.

 

Revenue for the period improved 10.4 per cent to US$2.6 billion.

 

For the first half, there was a drop in net profit to US$102 million, down from US$182 million in the previous corresponding period.

 

Revenue for H1 was up 5 per cent to US$5.1 billion, from US$4.9 billion in the year-ago period.

 

The company, which cultivates, harvests and processes palm oil, said in a bourse filing on Tuesday (Aug 13) that the profit decline was chiefly due to higher financial expenses and unrealised foreign-exchange loss.

 

Financial expenses for the six-month period increased 18.6 per cent to US$122.1 million, while foreign-exchange loss amounted to US$48.3 million, compared to a gain of US$16.9 million in the year-ago period.

 

However, increased sales for its downstream segment &ndash which consists of the processing and merchandising of palm oil products among others &ndash helped raise revenue. It posted an 11 per cent rise in sales volume, contributing US$5.1 billion in revenue.

 

GAR noted that this segment&rsquo s earnings before interest, taxes, depreciation, and amortisation (Ebitda) were US$282 million with a &ldquo robust&rdquo margin of 5.5 per cent, and constituting 57 per cent of the group&rsquo s consolidated Ebitda.

 

Earnings per share stood at US$0.0081 for the half year, down from US$0.0144 the previous year.

 

The company notes that the CPO market price for the period is down 8 per cent year on year

 

GOLDEN Agri-Resources&rsquo (GAR) net profit for the first quarter ended March stood at US$37 million, down 60 per cent on the year amid continued weakness of crude palm oil (CPO) prices during the period.

 

Revenue for the period was up 1 per cent to US$2.6 billion, mainly due to expanded sales volume that partly offset the impact of lower prices, said the palm oil company on Wednesday (May 15).

 

GAR noted that the CPO market price (FOB Belawan) for the quarter was down 8 per cent year on year, averaging at US$910 per tonne compared to US$990 per tonne in the same period last year.

 

It highlighted a resilient financial performance in the first quarter of 2024 in the face of weaker CPO prices.

 

Earnings before interest, taxes, depreciation, and amortisation (Ebitda) for the quarter was down 6 per cent to US$231 million, maintaining a margin of over 9 per cent.

 

&ldquo The plantation business saw a decline in output, while merchandising volume of the downstream business was responsible for the sales expansion,&rdquo said GAR.

 

&ldquo Overall, GAR recorded a robust performance in the first quarter of 2024, with the decline primarily caused by a foreign exchange loss compared to a gain recorded in the first quarter last year higher interest expenses in line with the market trend and seasonality of general and administrative expenses that occurred in the first quarter this year, as opposed to the second quarter in the previous year,&rdquo it added.

 

GAR said it will continue to focus on adding value to its products and services to enhance margins. &ldquo This includes leveraging agri-science innovation and technology to optimise productivity and maintain cost competitiveness while practising sustainable production.&rdquo

 

The company noted supply constraints of palm oil in the first quarter of 2024, primarily due to a combination of low seasonal yields and the effect of the El Nino phenomenon in Q3 2023.

 

&ldquo While supply constraints will gradually ease in the coming quarters, the growth prospect is expected to be limited,&rdquo said GAR, adding that geopolitical tensions and climate fluctuations will sustain uncertainties within the vegetable oil sector, supporting CPO prices for the rest of 2024.

 

 

Golden Agri-Resources (GAR) has reported earnings of US$197.6 million ($265.6 million) in the FY2023 ended Dec 31, 2023, 74.7% lower y-o-y.

 

Earnings per share (EPS) stood at 1.56 US cents for the year.

 

Revenue for the FY2023 fell by 14.7% y-o-y to US$9.76 billion due to lower crude palm oil (CPO) prices and offset by higher sales volume. Revenue for the 2HFY2023, however, rose with higher palm product output and lower fertilizer costs, which offset the lower CPO prices.

 

In FY2023, the average CPO free on board (FOB) price fell by 28% to US$901 per metric tonne, down from the average of US$1,248 per metric tonne in FY2022.

 

Gross profit fell by 38.8% y-o-y to US$1.85 billion while ebitda fell by 49% y-o-y to US$986 million.

 

During the year, fresh fruit bunches (FFB) production fell by 5% y-o-y to 9.59 million tonnes as production for both nucleus and plasma fell.

 

FFB yield also fell by 3% y-o-y to 19.7 tonnes per hectare.

 

Palm product output was down by 4% y-o-y to 2.94 million tonnes as crude palm oil (CPO) and palm kernel (PK) production fell during the year.

 

A final dividend of 0.613 cents per share has been proposed for FY2023, down from the 1.791 cents per share declared in FY2022. The proposed final dividend will be paid on May 16.

 

As at Dec 31, 2023, cash and cash equivalents stood at US$317.6 million.

 

In its full year earnings briefing on Feb 28, the group says that the slight decline in its product outputs was partly because of its fairly aggressive replanting program. With almost half of its planted area being between seven to 18 years old, Golden Agri targets to replant 15,000-20,000 hectares for the coming year. 

 

Meanwhile, it also expects the production target for 2024 to remain flat, due to its aggressive continuous replanting programme, and a lagging impact in its production due to the El Nino weather conditions. 

 

As weather conditions are &ldquo fairly erratic&rdquo , the group says that its difficult to predict its impact on production moving forward. The group&rsquo s Kalimantan plantations were the areas most affected by El Nino, compared to its Malaysia plantations.

 

Finally, the group expects to see a normalisation in CPO prices for 2024.

 

Golden Agri-Resources E5H 1.89% has replaced Keppel REIT K71U 0.00% in the Straits Times Index&rsquo s (STI) reserve list. The list comprises five of the highest non-ranking constituents according to their market capitalisation.

 

The change was reflected in the benchmark index&rsquo s quarterly review on Nov 30.

 

The other four companies on the reserve list are &mdash in alphabetical order &mdash CapitaLand Ascott Trust HMN 1.08%   (CLAS), Frasers Centrepoint Trust J69U 0.46%   (FCT), Keppel DC REIT and Suntec REIT.

 

There were no changes to the index&rsquo s constituents.

 

The changes from the latest review will take effect at the start of business on Dec 18. The next review will take place in March next year.