Golden Agri swings into the black with Q1 net profit of US$41m

GOLDEN Agri-Resources has swung back into the black with a net profit of US$41 million for its first quarter ended March 31, 2021, compared with a net loss of US$95 million the previous year.

This was attributed to the 24 per cent year-on-year increase in revenue to US$2.05 billion from US$1.66 billion due to the continued appreciation of crude palm oil (CPO) market prices.

Earnings before interest, taxes, depreciation, and amortisation (Ebitda) more than doubled to US$232 million compared with first quarter last year. This was due to an improvement in the group's upstream business - CPO prices (FOB Belawan) increased 57 per cent to an average of US$1,057 per tonne compared with the same period a year earlier.

Downstream business also recorded improvements year-on-year as the group overcame challenges posed by the Covid-19 pandemic, it said.

However, the group noted that oilseed production has been distorted by extremely dry weather in South America and other parts of the world.

"Supply has been very tight so far and we foresee that this will continue for the rest of the year. Accordingly, tightness in global vegetable oil supply will also continue," said the group in its business performance update.

Meanwhile, it is optimistic that demand for vegetable oils will remain strong both in the food and energy sectors as vaccination is being rolled out globally.

"We remain vigilant and continue to monitor the development of the Covid-19 pandemic in major consuming countries. Nonetheless, the industry and its supply chains have learned from the lockdowns implemented last year and are better equipped in managing these issues," said Golden Agri.

It is also hoping to tap the demand for healthier and responsibly sourced products among consumers, saying that the competitive attributes of palm oil will position Golden Agri to benefit from this trend.

Sustainability efforts are also underway despite the ongoing pandemic. The group has, for instance, achieved 94 per cent Traceability to the Plantation (TTP) for its entire palm supply chain as at the first quarter of the year. In addition, Golden Agri has boosted its capacity and capability to monitor deforestation risk at its estates and supply chains through a satellite monitoring system and AI-driven dashboard.

Shares of Golden Agri ended Wednesday at 27.5 Singapore cents, up 1.5 cents or 5.8 per cent.