Golden Agri Q1 Revenue Down 11% To US$1.8 Billion
JAKARTA– Golden Agri-Resources Ltd and its subsidiaries (“GAR” or the “Company”) recorded a decline in revenue to US$1.8 billion for the first quarter 2018 corresponding to decreases in both palm production and CPO prices. EBITDA reached US$121 million, while underlying profit also came in lower at US$25 million.
As a result, GAR posted a 68 per cent fall in net profit to US$11.9 million for 1Q 2018, down from US$37.6 million a year earlier.
Mr. Franky Widjaja, GAR Chairman and Chief Executive Officer said, “First quarter 2018 was a challenging period for the palm oil industry. Industry experts are also concerned about a production surplus in the second half of the year, due to seasonality and low production in the first quarter. However, we believe CPO prices will be supported by growing food demand as well as from increasing biodiesel usage. Over the long term, we believe demand for palm oil will remain strong, and the industry is well positioned to ride out occasional periods of volatility.”
Palm product output in the first quarter 2018 decreased both year-on-year and quarter-on-quarter by 12 percent and 6 percent, respectively, to approximately 612,000 tonnes. The lower year-on-year production was attributable to unusually high production last year in relation to the recovery from El Niño phenomenon in 2015, while the quarter-on-quarter decline was due to seasonality.
Furthermore, several estates in southern part of Kalimantan and Sumatra are still impacted by the prolonged drought condition. Coupled with lower CPO prices, EBITDA1 for the quarter was weaker at US$95 million. However, the margin remained resilient at 28 percent. As per 31 March 2018, GAR’s planted area stood at 500,345 hectares, of which 21 percent belongs to plasma smallholders.
The harvested area of 478,388 hectares yielded an average of 4.4 tonnes per hectare for the current quarter. The productivity of older estates (above 25 years age) continues to be high, with an average yield of 4.5 tonnes of fruits per hectare. The younger estates and replanting use a new generation of seeds that are higher yielding to sustain longterm production growth.
Despite these lower results, GAR’s financial position as at 31 March 2018 remained healthy with adjusted net gearing ratio5 of 0.43 times. Total consolidated assets continued to expand to US$8.37 billion.
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