MARKET DEVELOPMENT
CPO Sales Surge Despite Global Decline in Prices
CPO Sales Surge Despite Global Decline in Prices
19/07/2013 (Jakarta Post) - Two major crude palm oil (CPO) producers have reported significant increases in their sales volumes in the first half of this year despite a decline in the commodity’s price.
According to a file submitted to the Indonesia Stock Exchange (IDX) on Thursday, PT Astra Agro Lestari (AALI), a subsidiary of diversified conglomerate PT Astra International, said it sold 752,202 tons of CPO during the January to June period of this year, a 16.7 percent increase on the 644,439 tons in the same period last year.
Most of the CPO products were sold on the domestic market, which accounted for 97.9 percent of total sales volume.
Despite the increase in sales volume, AALI may report a drop in net profits as it suffered declines in the average selling price (ASP) in the first half of the year.
Its CPO sold for Rp 6,638 (65 US cents) per kilogram during the period, a 15.8 percent drop compared to Rp 7,886 per kilogram in the same period last year.
Another CPO producer PT BW Plantations (BWPT) also reported rising sales despite falling prices. The company sold 76,994 tons of CPO in the first six months of the year, increasing by around 22 percent from 63,084 tons in the same period last year.
However, its selling price dropped 16.8 percent to Rp 6,351 per kilogram in the first half of the year from Rp 7,636 per kilogram in the same period last year.
“The company is aiming for a 25 percent increase in CPO sales by year-end,” BWPT corporate
secretary Kelik Irwantoro said in an email.
CPO prices have declined due to lower demand as a result of the weakening global economy. According to figures from the Bursa Malaysia Derivatives as quoted by Bloomberg on Monday, CPO contracts for September delivery stood at 2,278 ringgit ($714) per ton, which is the lowest level since May 7.
Despite the declining prices, AALI said it was optimistic about the business in the long term due to increasing vegetable oil consumption particularly in Europe.
The company, citing figures from trade publication Oil World, said the global consumption level of major vegetable oil including soya oil, palm oil, sunflower oil and rapeseed oil had been increasing over the past 10 years.
“Moreover, CPO is the second most consumed vegetable oil in the EU [European Union] after rapeseed oil. The consumption level of CPO in EU countries has been increasing each year, which indicates greater dependency of EU countries on the CPO commodity,” AALI said in a report.
Sampoerna Agro’s head of investor relations Michael Kesuma said that CPO consumption in Indonesia had also increased.
“The increase was particularly evident in the last two months, ahead of Ramadhan,” he said.
Sampoerna Agro sells 90 percent of its CPO on the domestic market, according to Michael. The company has not released its production or sales volume for the first half of the year. However, Michael said the company would likely see flat production for the period.
“Our plants remain affected by unfavorable weather over the last 24 months, affecting our production,” Michael said.
According to a file submitted to the Indonesia Stock Exchange (IDX) on Thursday, PT Astra Agro Lestari (AALI), a subsidiary of diversified conglomerate PT Astra International, said it sold 752,202 tons of CPO during the January to June period of this year, a 16.7 percent increase on the 644,439 tons in the same period last year.
Most of the CPO products were sold on the domestic market, which accounted for 97.9 percent of total sales volume.
Despite the increase in sales volume, AALI may report a drop in net profits as it suffered declines in the average selling price (ASP) in the first half of the year.
Its CPO sold for Rp 6,638 (65 US cents) per kilogram during the period, a 15.8 percent drop compared to Rp 7,886 per kilogram in the same period last year.
Another CPO producer PT BW Plantations (BWPT) also reported rising sales despite falling prices. The company sold 76,994 tons of CPO in the first six months of the year, increasing by around 22 percent from 63,084 tons in the same period last year.
However, its selling price dropped 16.8 percent to Rp 6,351 per kilogram in the first half of the year from Rp 7,636 per kilogram in the same period last year.
“The company is aiming for a 25 percent increase in CPO sales by year-end,” BWPT corporate
secretary Kelik Irwantoro said in an email.
CPO prices have declined due to lower demand as a result of the weakening global economy. According to figures from the Bursa Malaysia Derivatives as quoted by Bloomberg on Monday, CPO contracts for September delivery stood at 2,278 ringgit ($714) per ton, which is the lowest level since May 7.
Despite the declining prices, AALI said it was optimistic about the business in the long term due to increasing vegetable oil consumption particularly in Europe.
The company, citing figures from trade publication Oil World, said the global consumption level of major vegetable oil including soya oil, palm oil, sunflower oil and rapeseed oil had been increasing over the past 10 years.
“Moreover, CPO is the second most consumed vegetable oil in the EU [European Union] after rapeseed oil. The consumption level of CPO in EU countries has been increasing each year, which indicates greater dependency of EU countries on the CPO commodity,” AALI said in a report.
Sampoerna Agro’s head of investor relations Michael Kesuma said that CPO consumption in Indonesia had also increased.
“The increase was particularly evident in the last two months, ahead of Ramadhan,” he said.
Sampoerna Agro sells 90 percent of its CPO on the domestic market, according to Michael. The company has not released its production or sales volume for the first half of the year. However, Michael said the company would likely see flat production for the period.
“Our plants remain affected by unfavorable weather over the last 24 months, affecting our production,” Michael said.