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Golden Agri back in the black in Q4 with US$79.3m profit on fair value gains

PALM oil plantation owner Golden Agri-Resources (GAR) has posted a net profit of US$79.3 million in the fourth quarter, reversing from a loss of US$29.1 million in the same period a year earlier as a stronger palm and laurics business offset lower crude palm oil prices.

A fair value gain on financial assets following the adoption of IFRS 9 also lifted fourth-quarter net other operating income to US$115.8 million, reversing from a net loss of US$11.5 million in the fourth quarter of 2017.

Revenue in the three months ended Dec 31 slipped 14.1 per cent to US$1.65 billion.

Fourth-quarter earnings per share was 0.62 US cents, up from a loss per share of 0.23 US cents in the same period a year earlier.

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For the full year ended Dec 31, 2018, the group made a net loss of US$1.8 million, reversing from a net profit of US$74.0 million in 2017. The drag came from foreign exchange losses, losses from changes in fair value of biological assets and deferred tax expense.

Weaker palm oil prices caused revenue in 2018 to fall 4.5 per cent to US$7.17 billion, while underlying profit sank 28.8 per cent.

The group said: "Declining palm oil prices continued to be the main factor in weaker performance in 2018. The industry as a whole saw very strong plantation output in 2018, resulting in high inventory levels and lower prices... We expect the demand growth for crude palm oil to remain stable supported by global food and energy demand, particularly the increase in biodiesel consumption in Indonesia."

Chairman and chief executive Franky O. Widjaja said: “2018 was a challenging year for operators in the palm oil industry. I am pleased that GAR once again proved resilient in unfavourable circumstances, based on our long-term investment in a vertically integrated operation."

He added: “We see demand from the energy sector as an important industry catalyst. Underpinned by strong support from the Indonesian government in implementing a larger biodiesel mixture mandate, we are optimistic that this will promote tighter supply and demand for palm oil and will eventually have a positive impact on crude palm oil prices.” 

A final dividend of 0.58 Singapore cent per share has been proposed, to be distributed on May 10. There was no interim dividend for 2018. In 2017, the group paid total dividends of 0.809 Singapore cent per share, so the total dividends in 2018 were 28.3 per cent lower.

Net asset value per share was US$0.33 as at end 2018, up from US$0.31 as at end 2017.