SINGAPORE (Apr 30): Integrated agribusiness group Indofood Agri Resources (IndoAgri) reported earnings of Rp 49.8 billion ($4.8 million) for the 1Q18 ended Mar, down more than threefold from Rp 170.6 billion a year ago on lower sales volume and selling prices of palm products.

Revenue for the quarter fell 27.1% to Rp 3.2 trillion from Rp 4.4 trillion in 1Q17 after lower sales contribution from its plantation and edible oils & fats (EOF) divisions.

Revenue from the plantation division fell 34% due to to lower average selling prices (ASPs) and sales volume of crude palm oil (CPO), palm kernel and rubber. Revenue from EOF also fell 6% on-year due to lower edible oils selling prices arising from the lower CPO costs.

Over the quarter, the group’s nucleus fresh fruit bunches (FFB) decreased by 6% to 695,000 tonnes.

Rotterdam CIF crude palm oil (CPO) prices decreased 6% to an average of US$674 ($893) per tonne in 1Q18, from US$717 per tonne in FY17.

Rubber prices also decreased by 14% to an average of US$1,715 per tonne compared to US$2,001 per tonne in FY17.

Due to the weakening of the Indonesian rupiah against the US dollar, the group recognised a foreign currency loss of Rp 22 billion compared to a gain of Rp 23 billion in 1Q17.

It also registered a Rp 6 billion loss from share of results of associate companies in the latest quarter, compared to Rp 249 million loss a year ago. This was mainly attributable to its associate company AAM, which engages in property operation, and FPNRL, a sugar business in the Philippines.

In its outlook, the group says it expects agricultural commodity prices to remain volatile, even as its operations continue to be supported by a positive domestic economic outlook.

IndoAgri says it intends to continue strengthening its fundamentals and improve margins through better yielding crops, cost control measures and other innovations to improve productivity.

Mark Wakeford, CEO and executive director of the group, highlights that IndoAgri is expanding its milling capacity with one new palm oil mill due for completion in 2019.

“The expansion of our refinery in Surabaya is completed and in operation, increasing the refinery capacity by 300,000 tonnes per annum. We have acquired a 50% stake in our second mill (Canapolis) in February 2018, which will become operational in 2020 and has a crushing capacity of 1.8m MT of cane. This will give us operational synergies with our existing CMAA mill, expanding our crushing capacity and keeping production costs low,” says Wakeford.

Shares in IndoAgri closed 1.6% higher at 32 cents on Friday.