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Bumitama Agri’s 1QFY2023 earnings down by 51% to $38.7 mil from lower ASPs

Revenue for the 1QFY2023 fell by 8% y-o-y to 3.60 trillion IDR.

Bumitama Agri P8Z has reported a net profit – or earnings – of 429.12 billion Indonesian rupiah (IDR) or $38.7 million for the 1QFY2023 ended March, 51% lower y-o-y.

The lower net profit was mainly attributable to the lower average selling prices (ASPs) as commodity prices normalised and fertilizer prices increased. That said, the figure still remains about 15% higher than the quarterly average seen in the past five years. It is also the second-highest quarterly figure on record, says the group.

Revenue for the 1QFY2023 fell by 8% y-o-y to 3.60 trillion IDR. During the period, revenue contribution from crude palm oil (CPO) increased by 3% y-o-y as sales volume grew by 19% y-o-y following an inventory drawdown. According to the group, the higher sales volume more than offset the 14% drop in selling prices during the period. In the 1QFY2023, the ASP for CPO fell by 14% y-o-y to 11,700 IDR per kg. Production volume also fell by 10% y-o-y to 235,000 tons.

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Meanwhile, revenue from palm kernel (PK) fell by 58% y-o-y due to an 11% y-o-y drop in sales volume. Average prices also fell by 53% y-o-y to 5,600 per kg. The bigger drop in PK compared to CPO prices was due to the unusual trading discount in palm kernel oil versus palm oil in Rotterdam due to price competitiveness from the soft oils. Production volume for PK in the quarter fell by 15% y-o-y to 48,000 tons.

Gross profit for the 1QFY2023 fell by 46% y-o-y to 811 billion IDR while ebitda fell by 53% y-o-y to 687 billion IDR. Ebitda margin fell by 18.7 percentage points y-o-y to 19.1%.

In the 1QFY2023, total fresh fruit bunches (FFB) harvest fell by 9% y-o-y to 1.07 million tons with FFB yield down by 13% y-o-y to 4.1 ton per hectare. According to the group, the quarter was a “normalised low-cycle period”.

FFB production from internal sources reached 745,585 tons in 1QFY2023, declining by 13% y-o-y and q-o-q. The oil extraction rate (OER) dipped by 0.4% y-o-y to 22.1%. FFB production is expected to be bigger in the 2HFY2023.

As at March 31, Bumitama Agri has a total planted area of around 187,000 hectares. This consists of nucleus estates of 131,000 hectares and plasma estates of 56,000 hectares. The average age is 13.3 years old as at Jan 1.

On sustainability, the group launched its updated sustainability policy in 2022, building on its inaugural policy introduced in 2015.

“This new policy addresses increased expectations from our stakeholders and challenges created by accelerating climate change and other emerging sustainability issues,” says Lim Gunawan Hariyanto, Chairman and CEO of Bumitama. The group’s 2022 sustainability report was published in April 2023.

The group’s independent director, Witjaksana Darmosarkoro, adds that it is aiming to meet its “ambitious” 30% emissions reduction target by 2030. “[We] are [also] planning to have methane capture and biogas facilities installed in all 15 palm oil mills.”

Shares in Bumitama Agri closed 2 cents lower or 3.33% down at 58 cents.

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