SINGAPORE (May 7): Halcyon Agri saw its earnings plummet 98.3% to US$0.3 million ($0.4 million) for the 1Q ended March, from US$15.3 million a year ago.
1Q18 revenue fell 15.6% to US$429.9 million, from US$509.2 million a year ago.
This was mainly due to lower rubber prices, partially offset by higher sales volume.
The group’s gross profit decreased 52.7% to US$22.8 million in 1Q18, down from US$48.2 million a year ago, as rubber prices continued on a downward trend into 2018.
As at end March, cash and cash equivalents stood at US$168.4 million.
“Global natural rubber prices continued to remain depressed in 1Q 2018 despite the implementation of market curbs by member countries of the Tripartite Rubber Council,” says Robert Meyer, executive director and chief executive officer of Halcyon Agri.
“The outdated nature of the rubber industry’s price discovery model leads to volatile distortions of price and value, creating the current price situation that does not incentivise farmers to tap trees, or invest in new plantings. This is the greatest threat to the long-term sustainability of the rubber industry,” he adds.
For the remainder of 2018, Halcyon says the management is focused on the integration of five newly acquired Standard Indonesian Rubber (SIR) factories.
“We expect to realise the benefits from the creation of our second Indonesian hub in Pontianak over the course of 2018 as well as from the enlarged production base in Indonesia where we are the largest producer of SIR,” the group adds.
Shares of Halcyon closed 1.5 cents lower, or down 2.6%, at 56.5 cents on Monday.
