PALM oil company Golden Agri-Resources (GAR) : E5H +1.89% posted a 25 per cent decline in net profit for the third quarter ended Sep 30, 2023, to US$68 million from US$90 million in the same period a year earlier.

 

Revenue in Q3 2023 rose 5 per cent to US$2.5 billion, from US$2.3 billion in Q3 2022.

 

In a business update on Tuesday (Nov 14), the company said its results remained firm, notwithstanding a normalisation in the price of crude palm oil (CPO) after it hit a record high in 2022.

 

GAR noted that the average CPO market price for the nine months ended Sep 30, 2023, stood at US$922 per tonne, down 33 per cent from last year&rsquo s high of US$1,368 per tonne.

 

The company&rsquo s revenue for the nine-month period fell 15 per cent year on year to US$7.3 billion. Lower average selling prices were partially offset by expanded sales volumes, it noted. Net profit for the same period fell 63 per cent to US$250 million.

 

&ldquo Our downstream business continues to perform well with contributions from value-added products to our overall performance and reducing the impact from industry volatility,&rdquo GAR said. &ldquo The increasing downstream sales volume has helped compensate for the decline in CPO price that impacted our plantation business.&rdquo

 

It added that it is &ldquo (remaining) vigilant&rdquo amid the current El Nino dry season in Indonesia, and is &ldquo proactively monitoring and responding to fire outbreaks&rdquo .

 

As concerns about adverse weather conditions grow, the company expects global vegetable oil supplies to remain tight. The upcoming festive season and strong biodiesel demand are also expected to support vegetable oil consumption, it said.

 

Golden Agri-Resources E5H 0.00% reports earnings of US$182.3 million ($246.9 million) for the 1HFY2023 ended June 30, 53.2% lower than the earnings of US$389.7 million.

 

Revenue fell by 11.2% y-o-y to US$4.88 billion due to lower crude palm oil (CPO) prices even though the group saw higher sales volumes for the period.

 

Gross profit fell by 35.6% y-o-y to US$882.3 million while ebitda fell by 40.8% y-o-y to US$477.6 million.

 

Fresh fruit bunch (FFB) and palm product output for 1HFY2023 were lower at 4,432,000 tonnes and 1,329,000 tonnes respectively as compared to 4,765,000 tonnes and 1,453,000 tonnes, respectively in 1H2022. This was primarily due to the replanting and heavy rainfalls.

 

Share of profit in joint ventures fell by 70.5% y-o-y to US$12.5 million mainly due to lower operating performance in a joint venture in line with the declining market prices during the current period.

 

No dividend was reported for the period compared to the dividend of 0.8 cents in the same period the year before.

 

As at June 30, cash and cash equivalents stood at US$399.3 million.

 

NORMALISED crude palm oil prices sent net profit for Golden Agri-Resources : E5H +1.89% falling 51 per cent to US$92 million in its first financial quarter ended Mar 31, from US$188 million the year before.

 

In a performance update on Friday (May 12), the mainboard-listed palm oil company said the market price for FOB Belawan crude palm oil for the quarter dropped 37 per cent on year, averaging US$900 per tonne compared with US$1,579 per tonne a year earlier.

 

Revenue for Q1 fell 6 per cent to US$2.54 billion, from US$2.7 billion previously, with expanded sales volume partly offsetting lower average selling prices.

 

Earnings before interest, taxes, depreciation and amortisation (Ebitda) stood at US$247 million, maintaining a resilient margin of 9.7 per cent. This came even as Ebitda fell 34 per cent from US$372 million the previous year.

 

Golden Agri noted that it maintained a gearing ratio of 0.54 times, and a low net debt to Ebitda of 0.08 times.

 

Overall, the group said its first-quarter performance &ldquo demonstrated the company&rsquo s resilience&rdquo amid lower crude palm oil prices, coming on the back of a record year in 2022.

 

Even as Golden Agri&rsquo s plantation business experienced a fall in output and higher fertiliser costs, it was partly compensated by the higher merchandising volume of the downstream business, it added. 

 

This is &ldquo another testament to the ability of (Golden Agri&rsquo s) integrated business model to mitigate the impact of volatile markets&rdquo , it said.

 

Nevertheless, Golden Agri said it expects global vegetable oil supply and demand dynamics to remain tight for the next quarter. It pointed out that continuing geopolitical tensions and uncertain weather conditions may slow down production recovery. 

 

As for palm, production growth will be curbed by the industry&rsquo s ageing trees, replanting activities, and the increasing chance of El Nino that is predicted to start in the second semester of the year, it said.

 

However, global palm oil demand is being sustained by a robust consumption of food, industrial, and bio-energy products, and will be further supported by rising biodiesel mixture mandates in various countries.

 

Such mandates include the Indonesian B35 mandate being on track, Golden Agri noted, referring to the Indonesian government&rsquo s target of producing fuel using a 35 per cent blend of palm oil this year, up from 30 per cent.

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