SINGAPORE (May 11): Halcyon Agri Corporation sunk into a core operating loss of US$2.6 million ($3.7 million) for the 1Q2020 ended March, a sharp swing from profit of US$5.6 million in the same period last year.

The loss was attributable to reduced rubber production during the 1Q wintering season, and decline in rubber prices. Rubber prices collapsed from a high of US$1,450 at the beginning of the year, to a four-year-low of US$1,038 as at end March.

Consequently, the group reported earnings before interest, taxes, depreciation, and amortization (EBITDA) of US$3.5 million in 1Q2020 ended March 31, 69% lower than the US$11.3 million reported in 1Q2019

The group has released selected operating and financial information for the quarter in line with SGX’s new regulation that quarterly reports are only mandatory for SGX-listed companies deemed to have higher risks since February.

In its business update on Monday, Halcyon Agri booked a 3.3% increase in revenue to US$412.8 million in 1Q2020, on higher sales and production volumes.

However, unit gross margin dropped y-o-y from US$114 per million tonnes (MT) to US$103 per MT, leading to an 8% y-o-y drop in gross profit to US$29.0 million in the same quarter.

Looking forward, the group predicts supply shortages in the medium term on the continued depression of rubber prices, and reduced demands due to the pandemic-induced closure of tyre factories around the world. 

In spite of that, there has been a surge in demand for natural rubber has also been seen from the medical industry due to the need for products such as tubes and personal protective equipment (PPE) including masks and medical gloves. 

As at 10.41am, shares in Halcyon Agri are trading flat at 33 cents.