04/04/2013 (The Star) - APAC plantation companies' credit profiles stable despite lower prices Add to Collection (Create New) | Print Download: Plain Text Fitch Ratings says in a new report that it expects the credit profile of Malaysia- and Indonesia-based oil palm plantation companies to be stable despite lower crude palm oil (CPO) prices.

High though easing CPO stocks, strong operating metrics in terms of fresh fruit bunch yield and oil extraction rates and weaker global demand have resulted in lower CPO prices. Another factor that is likely to result in EBITDA margin compression for Indonesian CPO plantation companies is the minimum wage revision by a substantial 44% with effect from November 2012.

Nevertheless, the plantation companies' large scale, low to moderate financial leverage and well spread out debt maturity profile plus CPO's price advantage relative to other vegetable oils are mitigating factors.

Fitch also expects Malaysia and Indonesia to maintain their leadership in the CPO export market in the medium term.

The market share of the two countries together stands at over 50%.

The special report on 'Crude Palm Oil' is available at www.fitchratings.com. - Reuters