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Golden Agri Q1 profit up 54.5% to US$18.3m on one-off gain

GOLDEN Agri-Resources reported a 54.5 per cent rise in net profit to US$18.3 million for the first quarter ended March 31, from US$11.9 million a year ago. 

This was mainly from a US$11.5 million gain on disposal of a subsidiary in Indonesia, the palm oil plantation owner said in a regulatory filing on Tuesday morning. Without it, operating profit fell 22.4 per cent to US$31.7 million from US$40.8 million in the previous year.

Earnings per share stood at 0.14 US cent from 0.09 US cent a year ago. There is no dividend for the quarter, unchanged from the year before. Shares of the company closed at S$0.275 on Monday, down 0.5 Singapore cent.

Revenue for the quarter dropped 11 per cent to US$1.62 billion from US$1.82 billion a year ago, due to softer crude palm oil (CPO) prices. Decreases in revenue were also seen across all segments.

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Revenue for its plantation and palm oil mills segment dropped 10.2 per cent to US$307.8 million from US$342.8 million a year ago, from lower CPO prices, partially offset by higher sales volume.

Its palm, laurics and others segment also saw revenue dip 10.8 per cent to US$1.61 billion from US$1.80 billion a year ago, also from lower CPO prices and lower sales volume for oilseeds in China. This was offset by a “strong demand” for biodiesel in Indonesia, the group said.

Meanwhile, inter-segment eliminations narrowed to US$300,171, from US$331,402 a year ago.

The group’s fresh fruit bunch and total palm product output for the current period were also higher at 2.2 million tonnes and 629,000 tonnes respectively, from 2.1 million tonnes and 612,000 tonnes respectively a year ago.

Golden Agri-Resources chairman and chief executive officer Franky O. Widjaja said the first quarter of the year saw a “gradual recovery” in CPO market prices compared with the fourth quarter of 2018.

"We expect to see more positive development on biodiesel demand as the realisation of the Indonesian biodiesel mandate during the first three months of 2019 was on track," he added.

The group said weather conditions, supply and demand for CPO and other competing seed oils, and developments in government policy of the countries it operates or trades with will continue to have an impact on commodities prices, including CPO.

It expects the demand growth for CPO to "remain stable", underpinned by global food and energy demand, particularly the increase in biodiesel consumption in Indonesia.

“However, given the increasing supply of CPO, the price of CPO is expected to be range-bound,” the group said, adding it would continue to enhance its integrated operation capabilities to optimise profit opportunities across the value chain, improve its yield, cost efficiency and sustainability initiatives.

OCBC Investment Research is maintaining its "hold" rating for the Indonesian palm oil company, with a fair value estimate of S$0.29. OCBC analyst Low Pei Han said Golden Agri-Resource's net profit for the quarter constituted 17 per cent of the brokerage's and street's full-year expectations.