Golden Agri FY18 swings into net loss of US$2 mil on falling CPO prices

SINGAPORE (Feb 27): Golden Agri-Resources, the Indonesia based palm oil plantation with integrated operations for the production of edible oil and fat, swung back into profitability in 4Q18 with earnings of US$79.3 million from a loss of US$29.1 million a year ago.

However, Golden Agri still recorded a net loss of US$2 million for FY18 primarily because of foreign exchange loss, loss from changes in fair value of biological assets and deferred tax expense. In FY17, Golden Agri reported earnings of US$74 million.

In FY18, Golden Agri recorded revenue of US$7.2 billion in FY18, a slight decrease compared to the previous year as affected by weaker palm oil prices.

Golden Agri says declining palm oil prices continued to be the main factor in weaker performance in FY18, especially from the plantations and palm oil segment. The industry as a whole saw very strong plantation output in FY18, resulting in high inventory levels and lower prices.

In the Plantations and palm oil mills segment, 4Q18 fruit yield reached 5.9 tonnes per hectare, 11% lower quarter-on-quarter due to seasonality. Despite the reduced mature area, harvested fruits expanded to 10.5 million tonnes with a fruit yield of 22.5 tonnes per hectare, at the top of the industry range. Palm product output reached a new record of slightly over three million tonnes in 2018, 12% higher than last year. As a result, Golden Agri’s FY18 upstream EBITDA reached US$391 million with a margin of 27%.

Revenue from the Palm, laurics and others segment reached US$7.1 billion, slightly lower than last year due to lower selling prices. Sales volume was maintained at 10.2 million tonnes although the volume at China oilseeds business contracted after the divestment of the Tianjin plant. With expanded 4Q18 EBITDA of US$120 million, full year EBITDA was US$184 million, 11% higher compared to the previous year.

For FY18, the board has proposed a final dividend of 0.58 cents per share or approximately US$54 million in total.

Franky O. Widjaja, Golden Agri Chairman and CEO, says: “FY18 was a challenging year for operators in the palm oil industry. I am pleased that GAR once again proved resilient in unfavourable circumstances, based on our long-term investment in a vertically integrated operation. Our focus remains on building GAR’s core competitive edge, delivering sustainably produced palm oil and palm-based products in an efficient and innovative way.”

Shares in Golden Agri closed at 28 cents on Tuesday.