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Golden Agri-Resources’ first half results impacted by weaker palm oil prices and downstream margin

Posted: Aug 14, 2018 3 minute read Investor Relation GAR
  • Palm product output in the second quarter 2018 saw strong quarter-on-quarter
    growth of 15 percent to 706,000 tonnes
  • EBITDA1 for the second quarter 2018 reported at US$117 million leading to
    first half figure of US$238 million

FINANCIAL HIGHLIGHTS

Singapore, 14 August 2018 – In the first half of 2018, Golden Agri-Resources
Ltd and its subsidiaries (“GAR” or the “Company”) revenue amounted to US$3.7 billion, a slight decline from last year mostly attributable to softer CPO prices. EBITDA1 reached US$238 million, while underlying profit2 came in lower at US$41million. GAR’s financial position as at 30 June 2018 remained healthy. Total consolidated assets expanded to US$8.49 billion whilst adjusted net gearing ratio5 stood at 0.45 times.

 

SEGMENTAL PERFORMANCE

Plantations and palm oil mills

Fruit yield in the second quarter 2018 increased strongly by nine percent year-onyear and 17 percent quarter-on-quarter to 5.2 tonnes per hectare, resulting in a
Pg 2 of 3
first half fruit yield of 9.6 tonnes per hectare. Palm product output reached over
1.3 million tonnes in first half 2018, almost the same output level achieved last
year. With the increasing trend in production quarter-on-quarter, we expect to
achieve strong plantation output growth in 2018.

CPO market prices saw a declining trend during first half 2018. Despite that, GAR
was able to maintain its upstream EBITDA1 margin at 29 percent, resulting in first
half EBITDA1 of US$197 million.

As per 30 June 2018, GAR’s planted area stood at 500,481 hectares, of which 21
percent is owned by plasma smallholders. To support long-term production
growth, GAR is focusing on replanting old plantations with next-generation, higheryielding planting materials. We target to replant between 10,000 to 15,000
hectares during 2018.

Palm and laurics

The downstream business continues to focus on enhancing integration and
pushing higher value added products. However, the market environment remained
challenging mainly due to governments’ intervention in commodity markets, such
as in India and Malaysia as well as changes in trade policies between US and
China. As a result, we saw margin compression for the palm and laurics segment
in the reporting period. Second quarter 2018 recorded EBITDA1 of US$20 million,
leading to the first half EBITDA1 of US$45 million with a softer margin of 1.4
percent.

Oilseeds

Uncertainty of the changes in trade policies between US and China has also
affected our oilseed business in China by causing higher prices for feedstock. This
segment recorded a negative EBITDA1 of US$4.6 million in the first half 2018.

 

OUTLOOK AND STRATEGY

Mr. Franky Widjaja, GAR Chairman and Chief Executive Officer elaborated: “GAR
faced a tough quarter in 2018, with performance impacted across all segments.
We welcome the Indonesian Government’s plan to pursue a higher biodiesel
mixture mandate amidst the appreciation of crude oil prices. This is part of the
government’s efforts to achieve independence in the energy sector while reducing
greenhouse gas emissions. In the longer term, we believe the fundamental
demand for palm oil remains robust. We will continue to drive operational
transformation for long-term shareholders return.”

Mr. Widjaja added: “GAR continues to be passionate in achieving responsible
palm oil production. We see sustainability as one of the main contributors to the
long term value of the Company. In mid-2018, GAR was honoured to be
recognised for our efforts in continuously improving our Environment, Social and
Governance (ESG) performance by debuting on the FTSE4Good Index Series.

This encourages us to continue on the path of adopting and implementing globallyrecognised standards and to share that commitment with our supply chain.”

 

About Golden Agri-Resources Ltd (GAR)

GAR is one of the leading palm oil plantation companies with a total planted area of
500,481 hectares (including plasma smallholders) as at 30 June 2018, located in
Indonesia. It has integrated operations focused on the production of palm-based edible
oil and fat.

Founded in 1996, GAR was listed on the Singapore Exchange in 1999 and has a market
capitalisation of US$2.8 billion as at 30 June 2018. Flambo International Limited, an
investment company, is currently GAR’s largest shareholder, with a 50.35 percent stake.
GAR has several subsidiaries, including PT SMART Tbk which was listed on the
Indonesia Stock Exchange in 1992.

GAR is focused on responsible palm oil production. In Indonesia, its primary activities
include cultivating and harvesting of oil palm trees; processing of fresh fruit bunch into
crude palm oil (CPO) and palm kernel; refining CPO into value-added products such as
cooking oil, margarine, shortening, biodiesel and oleo-chemicals; as well as
merchandising palm products throughout the world. It also has operations in China and
India including a deep-sea port, oilseeds crushing plant, production capabilities for refined
edible oil products as well as other food products such as noodles.

For media enquiries, please contact:

Wulan Suling
Mobile: +62 818 909 900
Email: [email protected]

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