SINGAPORE (May 14): Golden Agri-Resources (GAR) recorded a net loss of US$95 million (S$134.6 million), compared to last year’s earnings of US$18 million. The decline was mainly contributed from foreign exchange transaction loss.

Excluding net effect of net gain or loss from changes in fair value of biological assets, depreciation of bearer plants, exceptional items, foreign exchange gain or loss, and deferred tax expense or income, underlying profit came in at a loss of US$25 million.

Despite the disruption arising from the Covid-19 pandemic, GAR’s main food and biodiesel businesses have continued operating, as the palm sector is recognised as a strategic industry in Indonesia.

Revenue edged up 2% to US$1.66 billion due to higher average selling prices. The contribution was slightly offset by lower sales volume, which was affected by temporary logistics issues owing to the Covid-19-induced lockdown measures.

This quarter’s consolidated EBITDA was contributed by higher crude palm oil (CPO) market prices in 1Q20, as well as plantations and palm oil mills segment, although higher costs including the newly imposed CPO tax and levy in Indonesia resulted in the quarter’s 30% decrease to US$84 million.

The average international CPO (FOB Belawan) price for 1Q20 was 31% higher at US$672 per tonne, as compared to US$512 per tonne in 1Q19. On the other hand, GAR’s downstream business was impacted by higher input prices due to severe supply chain disruption.

Fruit yield for 1Q20 fell 24% on seasonality, and upstream palm product output dipped 2% to 615,000 tonnes.

Franky O. Widjaja, GAR Chairman and CEO, says, “In our view the CPO price is buffered from the decline in crude oil price because of staple demand for food usage, as history has repeatedly shown”.

“Although short-term volatility is expected with the current uncertainties of the COVID-19 outbreak, we believe the CPO price will recover once the pandemic subsides and inventories in consuming countries are replenished,” he adds.

“The limited growth in palm oil supply this year affected by the drought conditions and lower fertiliser application by small players in 2019 will keep the supply and demand balance healthy. Long-term fundamentals of the industry remain in place as palm oil is the most consumed vegetable oil with its high versatility and lowest cost of production,” says Widjaja.

Shares in Golden Agri-Resources closed 0.1 lower, or 0.7% down, at 15 cents on Wednesday, prior to the announcement.