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Bumitama Q3 profit slips 29.7% on lower palm oil prices

INDONESIAN palm oil producer Bumitama Agri on Tuesday posted a 29.7 per cent decline in third-quarter net profit to 189.61 billion rupiah (S$18 million) from 269.89 billion rupiah a year ago. 

This came as weaker palm oil prices took a toll on earnings, and expenses outweighed a slight increase in revenue for the three months ended Sept 30.

Earnings per share for the quarter stood at 108 rupiah, from 154 rupiah last year. 

Revenue rose 1.4 per cent to 1.94 trillion rupiah, mainly attributable to higher sales volume, which was offset by the decrease in average selling prices of crude palm oil and palm kernel, the group said.

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Cost of sales increased 7.7 per cent to 1.4 trillion rupiah, attributable to plantation maintenance, harvesting, and depreciation, among other things. 

Meanwhile, finance costs rose 33.1 per cent to 68 billion rupiah in the third-quarter, mainly due to higher interest rates arising from the London interbank offered rate (Libor). 

Bumitama Agri said no dividend has been declared as it intends to redeploy its cash reserves for the group’s development and operations.

Due to lower than anticipated oil palm production, the low prices of palm oil have gradually moved upward in the beginning of the fourth quarter this year, and this improvement is expected to continue until the end of this year, the group said. 

"We do not foresee any change in this trend in the Q4 2019 unless there are market turbulence or changes in the market affecting the demand and supply dynamics," Bumitama Agri said. 

It added that the long dry weather conditions had affected the group's production volume, and that it will continue to manage its cost and increase contribution from newly matured plantations.

Shares in Bumitama Agri closed unchanged at 59.5 Singapore cents on Monday.