MARKET DEVELOPMENT
Provident Raises Output Despite Price Uncertainty
Provident Raises Output Despite Price Uncertainty
01/06/2013 (Jakarta Post) - Plantation firm PT Provident Agro (PALM) plans to increase its crude palm oil (CPO) production this year despite uncertainty in the world’s CPO prices.
The publicly listed company said its CPO production would increase to 90,000 tons this year from 70,905 tons in 2012 to maintain its revenue growth, which was affected by the decline in commodity prices, Provident president director Tri Boewono said in Jakarta on Thursday.
Bloomberg recently reported the price of palm oil was estimated to decline 14 percent to 2,000 ringgit (US$650.63) a metric ton after July as output was expected to increase both in Indonesia and Malaysia, as well as due to the increase in stockpiles in the world’s two largest producers. Meanwhile, the Bursa Malaysia Derivatives recorded that the CPO contract for August delivery fell as much as 1.2 percent to 2,371 ringgit a metric ton on Thursday morning.
Provident finance director Devin Antonio Ridwan said that aside from its nucleus plantations, the company would source additional fresh fruit bunches (FFB) from its plasma plantations and from other plantations in the area to achieve the CPO target.
The company expects its FFB harvest to increase to 280,000 tons by year’s end. Last year, the company’s FFB production volume stood at 216,468 tons, while its palm kernel production volume reached 14,918 tons.
As of now, Provident, which is equally controlled by PT Saratoga Sentra Business and PT Provident Capital Indonesia, has a total of 44,670 hectares of planted areas in Bengkulu, Lampung, Riau, South Sumatra, West Kalimantan and West Sumatra provinces. It also operates three processing mills in Riau, West Kalimantan and West Sumatra with a total production capacity of 105 tons of CPO per hour.
The company has allocated $40 million in this year’s capital expenditure budget, which was derived from proceeds of its recent initial public offering (IPO) and bank loans. Provident generated Rp 290.17 billion ($29.58 million) from its IPO in October 2012 and has spent Rp 113.6 billion of the amount as of March 2013.
Devin said that the company had also secured loans from Bank DBS Indonesia in January and from PermataBank in May to finance its capital expenditure. Part of the budget would be used to maintain existing plantations and the rest would be used to acquire new ones, he added.
According to Tri, so far, the government’s moratorium on the conversion of primary forest and peatland has not affected the company’s business. “None of our plantations are located in the moratorium area,” he said. He added that the company was waiting for more information on the recent moratorium extension to make expansion plan decisions.
The publicly listed company said its CPO production would increase to 90,000 tons this year from 70,905 tons in 2012 to maintain its revenue growth, which was affected by the decline in commodity prices, Provident president director Tri Boewono said in Jakarta on Thursday.
Bloomberg recently reported the price of palm oil was estimated to decline 14 percent to 2,000 ringgit (US$650.63) a metric ton after July as output was expected to increase both in Indonesia and Malaysia, as well as due to the increase in stockpiles in the world’s two largest producers. Meanwhile, the Bursa Malaysia Derivatives recorded that the CPO contract for August delivery fell as much as 1.2 percent to 2,371 ringgit a metric ton on Thursday morning.
Provident finance director Devin Antonio Ridwan said that aside from its nucleus plantations, the company would source additional fresh fruit bunches (FFB) from its plasma plantations and from other plantations in the area to achieve the CPO target.
The company expects its FFB harvest to increase to 280,000 tons by year’s end. Last year, the company’s FFB production volume stood at 216,468 tons, while its palm kernel production volume reached 14,918 tons.
As of now, Provident, which is equally controlled by PT Saratoga Sentra Business and PT Provident Capital Indonesia, has a total of 44,670 hectares of planted areas in Bengkulu, Lampung, Riau, South Sumatra, West Kalimantan and West Sumatra provinces. It also operates three processing mills in Riau, West Kalimantan and West Sumatra with a total production capacity of 105 tons of CPO per hour.
The company has allocated $40 million in this year’s capital expenditure budget, which was derived from proceeds of its recent initial public offering (IPO) and bank loans. Provident generated Rp 290.17 billion ($29.58 million) from its IPO in October 2012 and has spent Rp 113.6 billion of the amount as of March 2013.
Devin said that the company had also secured loans from Bank DBS Indonesia in January and from PermataBank in May to finance its capital expenditure. Part of the budget would be used to maintain existing plantations and the rest would be used to acquire new ones, he added.
According to Tri, so far, the government’s moratorium on the conversion of primary forest and peatland has not affected the company’s business. “None of our plantations are located in the moratorium area,” he said. He added that the company was waiting for more information on the recent moratorium extension to make expansion plan decisions.