Indofood Agri’s 3Q profits plunge 52% on weaker edible oils and fats

Plus higher interest expenses.

The Plantations sector is in some sort of drought this quarter, and Indofood Agri is not an exception.

Indofood Agri's (IFAR) 3Q14 core net profit (excluding forex gain) fell 31% yoy and 52% qoq due to higher interest expenses, weaker edible oils and fats (EOF) contribution and higher internal CPO stocks at its refineries.

According to CIMB, the unrealised profit from these stocks was around Rp150bn at end-3Q14. 3Q14 plantation EBITDA increased 31% yoy, aided by an 18% yoy rise in FFB production, better average selling prices achieved for its CPO products (+7% yoy to Rp7,917 per kg), and stronger sugar contribution (Rp81bn). 

Average cost of production per palm product was relatively unchanged at Rp3,500/kg for 3Q14 and 3,957/kg for 9M14. The EOF division posted weaker 3Q14 EBITDA (-28% yoy and -54% qoq) due to lower demand. Its 50%-owned CMAA (Brazilian sugar business) turned around to report profit of Rp44bn in 3Q14 compared to loss of Rp27bn in 1H14, driven mainly by the higher sugar sales.

The group's investment in Roxas Holdings (integrated sugar business in Philippines) posted a maiden profit of Rp12bn in 9M14.