For the 1H20 ended June, Golden-Agri Resources (GAR) reported further net losses of US$157.0 million ($215.3 million), 238.2% down from the losses of US$46.4 million in 1H19.
Underlying loss for the period – which excludes net effect of net gain or loss from changes in fair value of biological assets and depreciation of bearer plants, exceptional item and other non-operating items – improved 25.8% to US$11.4 million from the loss of US$15.3 million a year ago.
While revenue for 1H20 improved 7.1% y-o-y to US$3.39 billion due to higher crude palm oil (CPO) prices, the group’s operating performance was also affected by higher costs particularly the newly imposed CPO export tax and levy in Indonesia and foreign exchange loss.
Accordingly, GAR recorded lower earnings before interest, taxes, depreciation and amortization (EBITDA) of US$189.2 million and net loss of the period of US$146.5 million.
Gross profit, however, saw a 12.8% y-o-y growth to US$388.5 million.
Revenue from GAR’s plantations and palm oil mills segment increased by 8.9% y-o-y to US$624.9 million, mainly due to the higher CPO prices, and partially offset by the lower sales volume.
The average international CPO (FOB Belawan) price for the current period was 24.4% higher y-o-y at US$616 per tonne. Consequently, EBITDA from the group’s plantations and palm oil mills segment increased by 36.2% y-o-y to US$131.7 million in 1H20.
Fresh fruit bunch (FFB) and palm product output for 1H2020 were lower at 4,084,000 tonnes and 1,219,000 tonnes respectively as compared to 4,455,000 tonnes and 1,293,000 tonnes respectively in 1H2019. The lower output was primarily affected by the dry weather conditions in 2019 as well as replanting programme.
GAR’s palm, laurics and others segment increased by 7.3% y-o-y to US$3.38 billion mainly due to the higher average selling prices, and partially offset by lower sales volume. The segment’s downstream business was impacted by higher input prices due to the severe supply chain disruption and therefore recorded a lower EBITDA of US$58.2 million in 1H20 as compared to US$100.4 million in 1H19.
GAR also recorded a net foreign exchange loss of US$48.3 million in 1H20 as compared to net gain of US$3.2 million in 1H19. The loss was mainly attributable to unrealised translation loss and fair value loss on forward foreign currency contracts entered to hedge the currency exposure during the current period.
As at end June, cash and cash equivalents stood at US$278.2 million.
“The global markets especially in key consuming countries have been recovering progressively as expected, while at the same time we saw strong commitment from the Indonesia government on its B30 mandate implementation,” says Franky O. Widjaja, chairman and CEO.
“Supply for the rest of the year is expected to remain tight even as we move into the high production season. The continuing replanting by the industry combined with drought conditions and lower fertiliser application by small players in 2019 have put pressure on supply growth this year, exacerbated by high rainfall experienced in some parts in Sumatra and Kalimantan during the first half 2020. We expect CPO price to maintain its healthy level, although there may always be periods of volatility,” he adds.
As at 9.51am, shares in GAR were trading 0.2 cents lower, or 1.3% down, at 15.5 cents.
