Bumitama Agri’s FFB yield plummets 24% to 3.1t/ha

Last year’s El Nino is still hurting output.

Bumitama Agri (BAL) is still reeling from 2015’s El Nino, as the agribusiness firm’s 1Q16 fresh fruit bunches (FFB) yield contracted 24% YoY to 3.1t/ha.

According to a report by Maybank Kim Eng, in terms of output, FFB nucleus output was 313,887 MT. This comes up meagre compared to BAL’s FFB group growth guidance of 8% for 2016.

There remains hope, though, as 1Q16 weak output could be partly mitigated by increased sales from the drawdown of inventories brought forward from last year.

In 1Q16, the Malaysian Oil Palm Board’s spot crude palm oil (CPO) price averaged US$576/t (or roughly $779.76/t). Taking into account the US$50/t CPO export levy imposed by the Indonesian government since 16 July last year, the actual CPO price proceeds revived will be even lower YoY.

With the low output, low CPO average selling price, and IDR 110b (roughly $11.26m) new annual depreciation charges effective 1 January 2016, Maybank KE expects BAL to report Q1 profits of IDR100-140b ($10.23-14.33m).

Moreover, the worst may not be over. Maybank KE further cautions that FFB yield and output growth may continue to show YoY contractions in Q2 such that BAL may not fully benefit from the recent CPO price hike.