Indofood Agri Resources sinks into the red with Q4 loss of 211.7b rupiah

INDOFOOD Agri Resources has recorded a net loss of 211.70 billion rupiah (S$20.4 million) for the fourth quarter to Dec 31, sinking into the red from a net profit of 76.94 billion rupiah the year before.

This was mainly due to the fall in sales and profit in its plantation division arising from weak commodity prices, partly offset by strong performance in the edible oils and fats (EOF) division, the mainboard-listed company said in a regulatory filing.

Loss per share (LPS) was at 151.7 rupiah per share, from earnings per share (EPS) of 55.1 rupiah the year before. 

Shares for the company closed at S$0.215 apiece on Wednesday. 

It is recommending a final dividend for the financial year, details of which will be announced before the end of March. Payment of the dividend will be subject to shareholders' approval at the forthcoming AGM (annual general meeting) to be convened at the end of April. Last year, the group's final cash dividend was 0.7 Singapore cent per share.

Revenue for the fourth quarter was down 6.5 per cent to 3.80 trillion rupiah, from 3.56 trillion rupiah the year before. The group's financial expenses increased by 26.7 per cent to 198.88 billion rupiah, from 156.95 billion rupiah the year before, mainly due to higher working capital facilities, and higher blended interest rate in line with the interest rate hikes by the US Fed and the Bank of Indonesia.

For fiscal 2018, net loss was at 221.76 billion rupiah from a net profit of 447.31 billion the year before. LPS was at 158.9 rupiah, down from EPS of 320.4 rupiah the year before. Meanwhile, net asset value per share was at 8,444 rupiah, from 8,671 rupiah the year prior.

Revenue was down 10.6 per cent to 14.06 trillion rupiah, from 15.73 trillion rupiah the year before. Similar to the fourth quarter, full-year results were affected by lower commodity prices and also the timing of shipments of crude palm oil (CPO), the group said. This saw CPO prices CIF Rotterdam in FY2018 being at an average of US$601 per tonne as compared to US$717 per tonne in 2017.

"Due to the ongoing US-China trade war, the Chinese government has put tariffs on US soya beans and caused soya bean prices to tumble. Along with the decreasing soya bean prices, rising production and higher year end-stocks against a weakening global demand for palm oil have put CPO prices under pressure," the group added.

Indofood Agri's group's performance was further affected by foreign currency losses arising from the weakening Indonesian rupiah, as well as impact arising from business combination under common control using book value instead of fair value. The group also saw lower profit contribution from joint ventures and fair value loss on biological assets. The group's financial expenses increased 11.3 per cent to 719.96 billion rupiah, from 647.04 billion rupiah the year before.

Due to ongoing economic uncertainties arising from US-China trade tensions, there is a lot of price pressure on agricultural commodities, Indofood Agri said. Thus, it believes CPO prices will "remain volatile" with demand projected from key import markets such as China and India, together with the relative price of crude oil which affects biodiesel demand. It added that its operations continue to be supported by the large domestic consumption and economic conditions in Indonesia.

Domestic palm demand is expected to be further supported by the roll-out of B20 (20 per cent) biodiesel blending in September 2018 to both public service obligation (PSO) and non-PSO sector. This is along with the Indonesian government's intention to accelerate the implementation of B30 biodiesel programme in 2019.

"We are progressively developing the immature estates and replanting older oil palm trees in Riau and North Sumatra. As a price taker, our plantations must always be a low-cost producer, and so we will continue to optimise the value chain, increase agricultural outputs, improve cost control and raise plantation productivity," the group said.