SINGAPORE (Aug 14): Bumitama Agri has recorded a 170.4% and 70.4% increase in 2Q17 and 1H17 earnings to IDR 337 billion ($34.4 million) and IDR 659 billion, respectively.

The improved earnings was mainly due to higher average selling price and higher sales volume from the recovery in palm production compared to the previous corresponding period.

Revenue increased by 39.5% to IDR 1,920 billion in 2Q17 and 40.1% to IDR 4,015 billion in 1H2017 compared to the previous corresponding periods. The improved palm and palm kernel production and higher average selling price had contributed to the improvement in revenue.

On the other hand, revenue from biodiesel was lower compared to previous year due to lower sales contract in the current period.

The group’s cost of sales increased by 19.9% to IDR 1,358 billion in 2Q17 and by 32.1% to IDR 2,916 billion in 1H17 compared to the previous corresponding periods. The increase was mainly attributable to higher production volume, purchase price of external FFB (fresh fruit bunches) and higher fertiliser application for the current period.

The group recorded a net foreign exchange gain of IDR 0.8 billion and IDR 12 billion in 2Q17 and 1H17 respectively, which was mainly due to translation gain on USD denominated borrowings in the Group’s IDR financial statements arising from the appreciation of IDR against USD during the current period.

Other expenses amounted to IDR 6 billion and IDR 15 billion in 2Q17 and 1H17 respectively, mainly consist of witholding tax expense on interest received by the company from its subsidiaries.

In its outlook, Bumitama Agri says the recovery of palm oil production will continue for the second half of 2017. The downward pressure on CPO prices could be very gradual going into the second half of 2017, unless there is fresh positive news which can lift palm prices from its current level.

Nevertheless, the palm oil industry remains positive, supported by growing domestic and emerging market demand and Biodiesel blending mandate, B20 of Indonesia.

“The group remains positive on the long term outlook of the palm oil industry and will continue to focus on yield improvement as well as cost management,” says the group.

Shares in Bumitama Agri closed at 70 cents on Monday.