Golden-Agri Resources (GAR) has reported earnings of US$188 million ($261.0 million) for the 1QFY2022, 4.58 times higher than earnings of US$41 million in the corresponding period the year before.
During the period, revenue increased by 32% y-o-y to US$2.7 billion.
Gross profit increased 39% y-o-y to US$673 million.
EBITDA surged 61% y-o-y to US$372 million.
Underlying profit increased 74% y-o-y to US$173 million.
The robust performance was mainly attributable to the continued appreciation of crude palm oil (CPO) market prices.
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During the quarter, CPO market prices for FOB Belawan increased by 49% y-o-y, averaging at US$1,579 per tonne.
According to the group, both its upstream and downstream businesses contributed to the stronger results for the quarter.
At the upstream, the strengthening of CPO prices more than offset the decrease in plantation output. The group’s downstream business also continued to see “a healthy margin” in the quarter.
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As at end-March, the group’s upstream palm product output fell 18% y-o-y to 668,000 metric tonnes (MT).
Downstream sales volume, too, fell 2% y-o-y to 2.2 million MT, due to lower feedstock availability in the market.
As at end-March, GAR’s planted area stood at 537,000 hectares, comprising 511,000 hectares of mature estates and 26,000 hectares of immature estimates.
Nucleus and plasma estates amounted to 423,000 and 114,000 hectares, respectively.
1QFY2022 fruit yield fell by 21% y-o-y to 4.2 tonnes per hectare, from the 1QFY2021’s high base of production that experienced a rebound after the El Nino. The production was also impacted by high rainfalls and old estates being prepared for replanting.
In its statement, GAR reported that it has achieved 95% of traceability to plantation (TTP) in the 1QFY2022 for its palm supply chain.
“Our supply chain is not static and there is always some turnover every year, making it challenging to achieve 100% TTP,” explains the group.
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“New suppliers joining our supply chain require time to build capacity to implement TTP. We are engaging actively with these and the very few suppliers who have yet to complete their TTP and have devised action plans to support them to achieve TTP. We are also exploring ways to build a database of TTP-compliant suppliers for future sourcing,” it adds.
Following this, the group says it will be focusing its resources to “deepen our engagement and design more targeted programmes to support our suppliers in their sustainability journey”.
Looking ahead, global oilseed production is predicted to remain limited, with palm oil production estimated to growing at a single-digit pace in 2022.
On the Indonesian government’s temporary export ban to tackle food inflation in the country, GAR says it “fully supports” the government’s policy to ensure an adequate domestic supply of cooking oil at affordable prices.
“We believe that our well-established vertically integrated business model provides us with the flexibility to adjust our operations to adapt with the evolving industry changes, including optimising our facilities, logistic capability and product portfolio,” writes the group. “However, the current uncertainties remain due to the ongoing geopolitical conflicts, new variants of Covid-19 and global supply chain issues which may affect our operations.”
Shares in Golden Agri Resources closed 0.5 cent higher or 1.75% up at 29 cents on May 11.
