INDOFOOD Agri Resources posted a net profit of 88.6 billion rupiah (S$7.8 million) for the first half ended Jun 30, down 64.8 per cent from 252 billion rupiah in the year-ago period.

On Monday (Jul 31), the mainboard-listed agribusiness group said this was mainly due to lower gross profit and a foreign exchange loss.

Revenue was down 5.8 per cent on the year to 7.6 trillion rupiah from 8.1 trillion rupiah, as the group was affected by lower selling prices of palm and edible oils and fats (EOF) products over H1.

Cost of sales grew 7.9 per cent to 6.4 trillion rupiah from 5.9 trillion rupiah, due to the higher sales volume of palm products and increased purchases of crude palm oil by the EOF division.

Gross profit margin for the period was down to 16.2 per cent compared with 26.8 per cent previously, resulting in a 43 per cent decline in gross profit to 1.2 trillion rupiah from 2.2 trillion rupiah a year earlier.

This was attributed mainly to the plantation division’s lower selling prices of palm products, offset in part by increased sales volumes for palm and EOF products.  

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Selling and distribution expenses were up 14 per cent to 235 billion rupiah from 206.1 billion rupiah, due to higher export levies and duties, as well as freight charges arising from the higher sales volume of EOF products.

A foreign exchange loss of 42 billion rupiah was recorded as opposed to a 7.6 billion rupiah foreign exchange gain booked in the previous year, resulting from the strengthening of the rupiah against the US dollar.

The latest set of results translated to an earnings per share (EPS) of 64 rupiah, down from the previous year’s EPS of 181 rupiah.

Like the previous year, no dividend was declared for H1 2023. 

Indofood Agri said it will continue to prioritise its capital expenditure on replanting older palms and critical infrastructure for its plantation division, while focusing on cost control improvements.

It intends to grow EOF sales volumes through competitive pricing strategies, with its efforts to be supported by targeted advertising campaigns.

Shares of Indofood Agri : 5JS 0% closed flat at S$0.295, before the news.