Halcyon Agri Q3 profit dives 75.8% on compressed margins from low rubber prices

HALCYON Agri Corporation's net profit dived 75.8 per cent for the third quarter ended Sept 30 to US$1.7 million from US$7.2 million a year ago as low rubber prices continue to compress its margins, the firm said on Monday.

Other factors that resulted in the lower earnings included higher finance costs due to interest rate hikes and the use of banking facilities to support the working capital requirements of new acquisitions.

Revenue rose 7.6 per cent to US$552.9 million from US$513.8 million for Q3 2017, on the back of increased sales volumes. However, the increase was offset by lower revenue per tonne, in line with the movement of natural rubber market prices during the periods.

The group noted that despite the challenging conditions, it has delivered above-par revenue per tonne compared to market prices. Its revenue per tonne of US$1,477 for Q3 2018 and US$1,609 for Q3 2017 were 11.1 per cent and 4.5 per cent higher than the average Sicom TSR20 prices for the corresponding periods, it said.

For the nine months ended Sept 30, Halcyon Agri recorded a net loss of US$1.1 million compared with a net profit of US$19.6 million for the corresponding period of the previous year. Revenue shrank 2.6 per cent to US$1.6 billion from US$1.65 billion for the same period.

Earnings per share for the third quarter was 0.11 US cent, compared with 0.45 US cent for the year-ago period. Year to date, loss per share was 0.07 US cent compared with earnings per share of 1.23 US cents for the first nine months of 2017.

No dividends were declared for the period under review.

"I have repeatedly stressed that the current pricing model is not sustainable for producers and smallholders alike," Halcyon Agri executive director and CEO Robert Meyer said.

He said that Halcyon Agri has been working on a digital marketplace called HeveaConnect to address structural deficiencies in the current pricing model, and is on track to launch it soon, providing a platform "where producers and consumers can discover prices in accordance with sustainability criteria".

Shares of Halcyon Agri last traded at US$0.337 on Friday.