Golden Agri Resources lost US$1.77m in 2018

It blamed softer CPO prices and the losses from its joint venture.

Golden Agri Resources (GAR) fell into the red in 2018 after it lost US$1.77m, but in Q4, its profits grew to US$79.31m after recovering from US$29.08m loss. Revenue dipped 4.5% and 14.1% to US$7.17b and US$1.65b for the full year and Q4, respectively.

“Operating performance was mainly affected by softer crude palm oil (CPO) prices and operating loss incurred during the market development phase in our joint venture. This was partially offset by fair value gain on financial assets recognised in the current year following the adoption of IFRS 9,” GAR said in its financial statement.

Revenue from GAR’s plantation and palm oil mills segment fell 13.2% to US$1.45b from US$1.67b, no thanks to lower CPO prices and higher inventory level during the current year. EBITDA also fell 21.7% YoY US$498.9m in FY2017 to US$390.6m.

Thanks to improved fresh fruit bunch (FFB) yield, GAR said its FFB and total palm product output for the current year grew to 10,525,000 tonnes and 3,049,000 tonnes respectively as compared to 9,607,000 tonnes and 2,724,000 tonnes respectively in the previous corresponding year.

The revenue of GAR’s palm, laurics and others segment fell by 4.5% to US$7.1b in the current year. This was mainly affected by lower CPO prices and lower sales and crushing volume for oilseeds in China, which was offset by the strong demand from biodiesel in Indonesia, it said.

“Despite margins being impacted by the governments’ intervention in commodity markets, such as in India and Malaysia, as well as the changes in US-China trade tariffs, EBITDA from this segment increased by 11.0% to US$184.2m due to additional contribution from biodiesel and destination sales, the removal of export levy when CPO reference price is below US$570 per tonne in Indonesia and fair value gain recorded during the year,” the company added.

Meanwhile, GAR’s share of loss in joint ventures hit US$40.4m mainly due to loss in a joint venture that started commercial operations in the last quarter of 2017 and is currently in the market development phase.

“Weather conditions, demand and supply of CPO and other competing seed oils, and developments in government policy of the countries we trade with will continue to have an impact on the prices for commodities including CPO. We expect the demand growth for CPO to remain stable supported by global food and energy demand, particularly the increase in biodiesel consumption in Indonesia,” the company said.

The board proposed a final ordinary dividend of 0.580 cents per share payable 10 May 2019.