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GMG Global Q1 profit plunges 93.8% on low rubber prices
VERTICALLY integrated rubber producer GMG Global's net profit for the first quarter of 2015 plunged 93.8 per cent to S$0.16 million. Over the same period, its revenues fell 33 per cent to S$150.7 million.
In a statement, GMG said the decline in its net profit is mainly due to the fall in the average selling price of natural rubber as well as the unrealised foreign exchange loss mainly as a result of depreciation of the euro against the Singapore dollar (its reporting currency) in the current year for the inter-company loans and advances granted to the African operations.
GMG's performance is highly dependent on the price of natural rubber, which was averaging US$1,429 per tonne in March 2015, and the fluctuations of foreign currencies namely the euro, the US dollars, the Thai baht and the Indonesian rupiah, GMG said in a statement. Barring unforeseen circumstances, it expects rubber prices for the rest of 2015 to remain range-bound at current levels.
It added that the operating environment of the group's business remains challenging in view of the prevailing oversupply of natural rubber. Manpower cost is also expected to continue to increase in the countries that it operates in, squeezing its profit margin in these markets, it said.
For the three months ended March 31, 2015, earnings per share stood at 0.002 cent while net asset value per share was 9.49 cents. No dividends were declared for the quarter.
Before the results were announced on Thursday, GMG closed trading unchanged at S$0.077.