Sustained first quarter 2024 EBITDA margin of over nine percent
Net profit was impacted by foreign exchange loss, interest expenses and lower yields due to El Ni?o
Financial position remained robust with a low gearing ratio of 0.56 times
SINGAPORE, May 15, 2024 /PRNewswire/ -- Golden Agri-Resources Ltd's ("GAR" or the "Company") financial performance in the first quarter of 2024 continued to demonstrate the integrated agribusiness' resilience in the face of weaker CPO prices. Despite an eight percent year-on-year decrease in CPO market price (FOB Belawan), from an average of US$990 per tonne in the first quarter of 2023 to US$910 per tonne in the same period this year, increased sales volume partly offset the impact of lower prices to deliver a year-on-year increase in revenue to US$2.56 billion.
GAR's Q1 2024 financial results demonstrate continued resilience for the integrated agribusiness.
EBITDA for the quarter stood at US$231 million, maintaining a margin of over nine percent, while underlying profit and net profit came in lower at US$79 million and US$37 million, respectively.
Declines were driven by lower plantation output, foreign exchange loss compared to the first quarter last year; higher interest expenses, in line with market trends; and seasonality of general and administrative expenses that occurred in the first quarter this year, as opposed to the second quarter in the previous year.
GAR's financial position continues to be robust on the back of a better gearing ratio of 0.56 times and net debt to EBITDA of 0.28 times.
On the outlook, Mr Franky O. Widjaja, GAR Chairman and Chief Executive Officer, commented: "Palm oil availability was notably constrained in the first quarter of 2024, due to a combination of low seasonal yields exacerbated by the El Ni?o phenomenon that peaked in the third quarter of 2023. While supply constraints will gradually ease in the coming quarters, growth prospects are expected to be limited. Moreover, the ongoing escalation of geopolitical tensions and climate fluctuations will sustain uncertainties within the vegetable oil sector. This is expected to support CPO prices for the remainder of the year. We will continue to closely observe the development of these key factors alongside the global macroeconomic conditions."
Dip in palm product output was balanced by higher downstream sales volume.
As of 31 March 2024, GAR's planted area remained at approximately 532,000 hectares, of which 494,000 hectares were mature. Nucleus and plasma estates made up 417,000 and 115,000 hectares of this area respectively.
Fruit yield for the first quarter of 2024 declined by six percent year-on-year, from 4.16 tonnes to 3.89 tonnes per hectare as the impact from last year's El Ni?o conditions began to materialise, in addition to the preparation of the Company's old estates for replanting. However, this shortfall was partly mitigated by higher fruit purchases from third-party suppliers, limiting the decrease in palm product output to four percent for the quarter, at 590,000 tonnes compared to 617,000 tonnes for the same period last year.
GAR's downstream business successfully increased its sales volume by ten percent year-on-year in the first quarter of 2024, primarily due to refined palm derivative products.
GAR continues to focus on adding value to its products and services to enhance margins. This includes leveraging agri-science innovation and technology to optimise productivity and maintain cost competitiveness while practising sustainable production. GAR is also exploring new growth areas such as alternative biomass products and other sustainability initiatives.
The Company is also extending its commitment to supply chain traceability to include its global supply chain. For the first time in 2024, GAR has started implementing Traceability to the Mill (TTM) for its palm supply chain outside of Indonesia. All suppliers to GAR's downstream joint venture business in India have been mapped, and work is underway to collect information on its Latin American suppliers. GAR is also working on traceability in its non-palm commodity supply chains.
In Indonesia, GAR has achieved 99 percent Traceability to the Plantation (TTP) as of first quarter of 2024, underpinning its efforts to enhance sustainable practices across its supply chain and ensure compliance with its No Deforestation, No Peat and No Exploitation (NDPE) commitments. These efforts are instrumental in helping GAR comply with incoming regulations such as the EU Deforestation Regulation (EUDR).
GAR has taken a structured and comprehensive approach to calculating its carbon emissions across Scopes 1-3 and identifying a pathway to Net Zero by 2050. This data will inform the Company's decarbonisation strategy and roadmap which is targeted for completion this year, with a focus on reducing emissions in four areas: implementing No Deforestation and No Peat commitments; realising carbon sequestration from carbon removal initiatives; methane avoidance and utilisation; and renewable energy for heat and power.
About Golden Agri-Resources Ltd (GAR)
GAR is a leading fully-integrated agribusiness company. In Indonesia, it manages an oil palm plantation area of 532,488 hectares (including plasma smallholders) as of 31 March 2024. It has integrated operations focused on the technology-driven production and distribution of extensive portfolio of palm-based products throughout its established international marketing network.
Founded in 1996, GAR was listed on the Singapore Exchange in 1999 and has a market capitalisation of US$2.5 billion as of 28 March 2024. Flambo International Limited, an investment company, is GAR's largest shareholder, with a 50.56 percent stake. In addition, GAR's subsidiary, PT SMART Tbk was listed on the Indonesia Stock Exchange in 1992.
As an integrated agribusiness, GAR delivers an efficient end-to-end supply chain, from responsible production to global delivery. In Indonesia, its primary activities include cultivating and harvesting oil palm trees; the processing of fresh fruit bunch into crude palm oil (CPO) and palm kernel; refining CPO into value-added products such as cooking oil, margarine, shortening, biodiesel and oleo-chemicals; as well as merchandising palm products globally.
GAR's products are delivered to a diversified customer base in over 100 countries through its global distribution network with shipping and logistics capabilities, destination marketing, on-shore refining and ex-tank operations. GAR also has complementary businesses such as soybean-based products in China, sunflower-based products in India, and sugar businesses.
