Golden Agri-Resources sinks into the red with $12.52m loss in Q3

Plantation profits slipped due to lower fruit yield and a smaller palm inventory.

Golden Agri-Resources (GAR) suffered from a core loss of $12.52m (US$9.2m) in Q3 2019, marking a deterioration from its recorded net profit of $14.83m (US$10.9m) in the same period last year.

Core net loss widened to US$66m for January-September 2019, no thanks to higher than expected estates costs. Excluding exceptional and forex gains and tax income, net loss for the period was at US$46m.

Fresh fruit bunches (FFB) output from its nucleus estates fell by 9.4% YoY due to lower yields. Secondly, the average selling price (ASP) for its crude palm oil (CPO) products fell by 12% YoY to US$537 per tonne, whilst the cost of production rose 11% YoY to US$295 per tonne. This was partially offset by an inventory selldown.

Its palm inventory also took a hit and shrank from 569,000 tonnes at end-June to 525,000 tonnes at end-September 2019. As a result, plantation EBITDA fell 35% YoY in 3Q19 and 45% YoY in 9M19.

The stronger downstream profit of US$38m in 3Q2019 was only able to partially offset the weaker plantation profit.

CGS-CIMB analyst Ivy Ng added that GAR said in its results reporting that it expects FFB output from its nucleus estates to decline 3% YoY in 2019 from previous guidance of flat output. It projects 2020 output to fall by another 3% due to dry weather and replanting plans.

The group replanted 6,400ha of its estates in 9M2019 and is targeting to replant 15,000ha for 2019, Ng noted. “The group also explained that its downstream business benefited from the suspension of export levy in 1Q2019, higher biodiesel profit margin and volume as well as contribution from India. The group also predicted that CPO price could hit US$700/tonne in 2020."