Golden Agri reports 55% higher 1Q earnings of $25 mil on gain of disposal

SINGAPORE (May 14): Golden Agri-Resources (GAR) recorded 1Q19 earnings of US$18 million ($24.7 million), 55% higher than last year, mainly contributed from the gain on disposal of a subsidiary in Indonesia for US$11.5 million.

Excluding exceptional items and other non-operating item, net effect of net gain or loss from changes in fair value of biological assets and depreciation of bearer plants, underlying profit for 1Q19 came in 53% lower at $12 million.

Revenue saw a 11% decline to US$1.62 billion due to depressed palm oil market prices which continued to be the main factor affecting its performance this year, especially from the plantations and palm oil segment.

However, its integrated business model has helped GAR to withstand the price volatility with better performance from the downstream business.

The year-on-year increase in production output compensated for the weakening CPO market prices during the quarter so EBITDA for 1Q19 stayed flat at US$121 million from a year ago.

The average international CPO (FOB Belawan) price for 1Q19 was 20.6% lower at US$512 per tonne as compared to US$645 per tonne in 1Q18.

Fresh fruit bunch (FFB) and total palm product output for 1Q19 were higher at 2,174,000 tonnes and 629,000 tonnes respectively compared to 2,125,000 tonnes and 612,000 tonnes respectively in 1Q18.

Segmentally, EBITDA for plantations and palm oil mills fell 35.9% to US$60.8 million as to the lower CPO prices was partially offset by the higher sales volume while EBITDA for palm, laurics and others more than doubled to US$59 million year-on-year.

Franky O. Widjaja, GAR Chairman and CEO, says, “First quarter 2019 saw a gradual recovery in CPO market prices compared to fourth quarter of 2018. We expect to see more positive development on biodiesel demand as the realisation of the Indonesian biodiesel mandate during the first three months of 2019 was on track.”

Shares in GAR closed 0.5 cent lower at 28 cents on Monday.