Golden Agri sinks into the red with US$95m net loss in Q1

GOLDEN Agri-Resources has sunk into the red with a net loss of US$95 million for its first quarter ended March 31, 2020, compared with a net profit of US$18 million a year ago. 

This was mainly due to foreign exchange translation loss, the palm oil plantation owner said in a bourse filing on Thursday morning. 

Revenue rose 2 per cent to US$1.66 billion for the quarter, up from US$1.62 billion in the previous year, thanks to higher average selling prices. This was partially offset by lower sales volume, which was severely affected by temporary logistics issues following the lockdown during the Covid-19 pandemic, the company said. 

In addition, higher costs, including the newly imposed crude palm oil (CPO) export tax and levy, led to a 30 per cent fall in earnings before interest, taxes, depreciation, and amortisation (Ebitda) to US$84 million, from US$121 million a year earlier. 

Golden Agri noted that the pandemic has created short-term disruptions, resulting in volatility in CPO prices. Nonetheless, the company said that its financial position continues to be "healthy", with sufficient lines of credit and reserves in place to draw from if needed.

The group added that it is implementing initiatives to preserve liquidity, including more intensive cost reductions and increasing efficiency in its operations.

Franky Widjaja, Golden Agri's chairman and chief executive officer, said: "In our view, the CPO price is buffered from the decline in crude oil price because of staple demand for food usage, as history has repeatedly shown. Although short-term volatility is expected with the current uncertainties due to Covid-19, we believe the CPO price will recover once the pandemic subsides and inventories in consuming countries are replenished."

He added that limited growth in palm oil supply this year due to drought conditions and lower fertiliser application by small players in 2019 will keep the supply and demand balance healthy.

"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," said Mr Widjaja. 

Golden Agri shares closed at 15 Singapore cents on Wednesday, down 0.1 cent or 0.7 per cent.