Golden Agri struggles as China operations sink into the red

Its plant may be shut down temporarily.

All eyes are focused on Golden Agri-Resources’ (GAR) loss-making China operations when the group releases its results on November 12. According to OCBC, GAR’s China plant may continue to bleed red ink due to the negative crush margins there.

OCBC noted that while GAR’s outlook appears to be improving as CPO prices stabilize, the group’s management is still mulling the temporary shutdown of its China plant to rein in its losses.

“Previously, management mentioned during its 2Q14 results briefing that it is “actively looking for solutions”, which involves strategic sourcing opportunities and the possibility of temporarily shutting down the plant to reduce the losses. Another closely watched item would be its inventory – GAR had also previously held higher-than-usual amount of CPO stock that it took a while to clear,” noted OCBC.