Golden Agri Q1 profit falls 60% to US$37 million on weaker crude palm oil prices
15/05/2024 (The Business Times) - GOLDEN Agri-Resources’ (GAR) net profit for the first quarter ended March stood at US$37 million, down 60 per cent on the year amid continued weakness of crude palm oil (CPO) prices during the period.
Revenue for the period was up 1 per cent to US$2.6 billion, mainly due to expanded sales volume that partly offset the impact of lower prices, said the palm oil company on Wednesday (May 15).
GAR noted that the CPO market price (FOB Belawan) for the quarter was down 8 per cent year on year, averaging at US$910 per tonne compared to US$990 per tonne in the same period last year.
It highlighted a resilient financial performance in the first quarter of 2024 in the face of weaker CPO prices.
Earnings before interest, taxes, depreciation, and amortisation (Ebitda) for the quarter was down 6 per cent to US$231 million, maintaining a margin of over 9 per cent.
“The plantation business saw a decline in output, while merchandising volume of the downstream business was responsible for the sales expansion,” said GAR.
“Overall, GAR recorded a robust performance in the first quarter of 2024, with the decline primarily caused by a foreign exchange loss compared to a gain recorded in the first quarter last year; higher interest expenses in line with the market trend; and seasonality of general and administrative expenses that occurred in the first quarter this year, as opposed to the second quarter in the previous year,” it added.
GAR said it will continue to focus on adding value to its products and services to enhance margins. “This includes leveraging agri-science innovation and technology to optimise productivity and maintain cost competitiveness while practicing sustainable production.”
The company noted supply constraints of palm oil in the first quarter of 2024, primarily due to a combination of low seasonal yields and the effect of the El Nino phenomenon in Q3 2023.
“While supply constraints will gradually ease in the coming quarters, the growth prospect is expected to be limited,” said GAR, adding that geopolitical tensions and climate fluctuations will sustain uncertainties within the vegetable oil sector, supporting CPO prices for the rest of 2024.