GAR’s profits take a 59% QoQ nosedive to US$16m in Q3

Blame it on forex losses from depreciating IDR, MYR.

Golden Agri-Resources (GAR)’s net income stood at US$16m in Q3, according to a report by Barclays. This reflects an astounding surge of 261% YOY from its US$4m income recorded in 3Q14, but a 59% QoQ nosedive from the previous quarter’s US$39m. The decline is due mainly to forex losses resulting from a depreciating IDR and MYR.

“A deepening forex loss of US$45.4mn in 3Q15 compared to a US$18.5mn loss in 2Q15, a result of translation loss on IDR denominated monetary assets and forex contracts entered to hedge the IDR and MYR exposure,” notes Barclays.

Further, earnings were shaken due to the lack of income fair value gain from financial assets coupled with lower income from seedling sales.
GAR notes that 70% of its plantation was impacted by El Nino, thus putting pressure on 2016-17 output.

Barclays believes, though, that significant tailwinds can be expected in the coming quarters. Crude palm oil price is on the rebound, and GAR’s expansion is still on track as new capacity in Kalimantan will be commissioned in March to take advantage of the favorable biodiesel policy in Indonesia.