Golden Agri Q3 net loss narrows from previous quarter on higher CPO prices

GOLDEN Agri-Resources' net loss narrowed for its fiscal third quarter, shrinking 92 per cent to US$5 million for the three months ended Sept 30, from US$61 million in the previous quarter, it said Friday morning.

In a business update, the palm oil plantation company said rising crude palm oil (CPO) market prices resulted in the continuing recovery of earnings before interest, tax, depreciation and amortisation (EBITDA) in the third quarter. EBITDA rose 19 per cent to US$124 million, from US$105 million in Q2.

Revenue for the third quarter fell 7 per cent to US$1.61 billion, from US$1.73 billion in Q2, due to lower sales volume.

For the nine-month period ended Sept 30, Golden Agri recorded US$5 billion in revenue, up 6 per cent from US$4.73 billion in the prior-year period, primarily attributable to higher average selling prices.

However, its net loss widened during the first nine months of 2020, rising to US$162 million, from US$46 million for the same period in 2019. Golden Agri said this was due to foreign exchange translation loss and deferred tax expense, which are mostly non-cash.

"Although the industry is in its peak production season, global palm oil supply and demand positions remain tight," Golden Agri said.

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It noted that there is a tight supply situation for vegetable oils, as water deficits last year and reduced fertiliser application have resulted in current palm oil production lagging behind expectation. It added that extreme weather is also a risk factor that can impact supply.

"Demand remains strong as key consuming countries have continued to replenish their stocks while Indonesia biodiesel consumption further strengthened demand fundamentals," Golden Agri said, adding that there is short-term support to crude palm oil prices amid low crude oil prices.

It also said price volatility can be expected, especially with uncertainties arising from Covid-19.

"Long-term fundamentals of the industry remain in place as palm oil is the most consumed vegetable oil with its high versatility and lowest cost of production."

Golden Agri shares closed 0.2 Singapore cent or 1.4 per cent higher at 14.9 cents on Thursday.