Weaker rupiah, lower commodity prices hit IndoAgri Q1 results

Singapore

DRAGGED down by a weaker Rupiah, softer commodity prices and foreign exchange losses, Indofood Agri Resources posted an 80.7 per cent year-on-year plunge in net profit to 35.03 billion rupiah.

Revenue slipped 16.1 per cent to 2.66 trillion rupiah in 1Q15 due to lower contributions from both its plantations and edible oils & fats (EOF) segments. Earnings per share worked out to 28 rupiah, down from 128 rupiah previously. Its plantation division saw total revenue decrease 24 per cent to 1.8 trillion rupiah (S$183.8 million) on the back of lower average selling price and sales volume of palm products. Meanwhile, its EOF division reported a total revenue of 1.9 trillion rupiah, down 19 per cent from the corresponding quarter last year. Gross profit fell 17 per cent to 739 billion rupiah, due to lower average selling prices and sales volume of palm products, partly offet by higher profit contributions from the EOF division.

During the quarter, the group recognised foreign exchange losses of 116 billion rupiah - versus gains of 86 billion rupiah in 1Q14 - from the weakening of the rupiah against the greenback and Sing dollar. IndoAgri also reported negative working capital of 979 billion rupiah as at end March 2015. "The group is currently in the midst of reviewing its funding arrangement to optimise its capital structure and improve the current ratio during the year," it said. Cash and cash equivalents declined from 3.84 trillion rupiah as at end March last year to 2.49 trillion rupiah as at end March this year. Commenting on the future, it said: "We expect long-term demand for basic commodities like palm oil to remain strong, underpinned by growing consumer markets and a rising middle class."

For rubber, the long-term market remains healthy though, prices will remain under pressure in the medium term until global demand rebounds, it added. Meanwhile, global sugar prices remain depressed in US$ terms. In Indonesia, domestic prices for sugar were also lower in 1Q15 and 2014, despite strong demand, due to excessive imports in 2013.

Shares in IndoAgri closed at 73 Singapore cents, down one cent.