Halcyon Agri’s profit hits record low as rubber prices slide

It’s also grappling with higher operating costs.

Mainboard-listed Halcyon Agri is facing a record low gross material profit, margin pressure and a weakened balance sheet thanks to the slide in rubber prices.

According to UOB Kay Hian, Halcyon’s recent bout of acquisitions has not done the group any favors. The firm now faces higher finance costs and a growing risk of capacity underutilisation.

“The considerable increase in interest expense was partly due to an increase in acquisition term loans and a newly-incurred US$1.2m interest cost in 3Q14 from a Medium Term Note (MTN) issued in Jul 14 to finance the acquisition of Anson. Given the current rubber bear market, risk of capacity underutilisation heightens as the group continues to execute and transition towards being a rubber supply chain manager. HALC is expected to be well positioned for growth should rubber prices recover,” noted UOB Kay Hian.