SINGAPORE (May 8): Bumitama Agri (BAL) reported a 16.8% decline in 1Q earnings to IDR231.8 billion ($21.7 million) from IDR278.4 billion on lower revenue and compressed margins.
Revenue for the quarter fell to IDR1.9 trillion on the back of lower crude palm oil (CPO) and Palm Kernel (PK) prices, which fell by 7.6% and 21.5%, respectively.
Cost of sales grew 10.8% to IDR1.4 trillion from IDR1.6 trillion and mainly comprised costs for plantation maintenance, harvesting, plantation overhead, depreciation and amortisation, milling, and fresh fruit bunches (FFB) purchased externally including plasma and third parties.
Finance costs grew by 22% to IDR46 billion from IDR37.6 billion a year ago, mainly due to higher LIBOR rate during the period under review.
A foreign exchange (forex) loss of IDR16 billion was also recorded over the quarter due to translation losses on the group’s USD-denominated borrowings as a result of depreciation of the IDR against the USD.
In its outlook, BAL says it will continue to strengthen its business strategies, especially in areas of debt and cash management amid rising financing costs in the current economic environment.
Going forward, the group expects lower estimated soybean volume and stronger estimated demand of biodiesel, in both Indonesia and Malaysia, to balance higher palm oil production vis-à-vis FY2017 and therefore lend support to the palm oil prices.
It also anticipates improvement in its production volume in 2018 due to continued yield recovery, implementation of best management practices and contribution from newly matured plantations.
Shares in BAL closed 1 cent lower at 69 cents on Monday.