ASEAN KEY DESTINATIONS
Palm oil producers’ net profits skyrocket on higherselling prices
Publicly listed palm oil producers rounded up the first half of the year with significant net profit growth after gloomy business last year on the back of improving crude palm oil (CPO) prices and a rise in production.
Sampoerna Agro, part of tobacco conglomerate Sampoerna Group, saw its net profit rise by nearly sevenfold to Rp 192.63 billion between January and June this year, compared to the Rp 27.52 billion it generated during the same period last year.
The significant jump in the company’s bottom line was propped by a 43.56 percent year-on-year (y-o-y) revenue increase up to Rp 1.45 trillion and a 42.8 percent increase in its CPO production to 142,045 tons.
“The significant increase in our sales is due to the rise in our average selling price [ASP],” the company’s written statement, made available on the Indonesia Stock Exchange (IDX) website on Wednesday, said.
Sampoerna Agro saw its ASP for CPO soar by about 38 percent to reach Rp 8,865 per kilogram in the first half of 2014, compared with the Rp 6,401 it registered last year.
Sampoerna Agro is not the only plantation firm to end its first six months this year with skyrocketing profit, as Astra Agro Lestari (AALI) and Dharma Satya Nusantara (DSNG) also enjoyed significant jump in their bottom line thanks to increasing CPO selling prices.
AALI, plantation unit of diversified conglomerate Astra Internasional Indonesia, reported that its net profit doubled to Rp 1.42 trillion in the first half of this year from Rp 745.64 billion between January and June last year.
AALI saw a 45.71 percent y-o-y revenue increase to hit Rp 8.01 trillion in the first half. Its CPO sales volume, however, declined 10.3 percent to 674,730 tons due to the company’s strategy to shift some of its output to olein production.
The company attributed the astonishing rise in revenue to its ascending CPO prices, which increased 31.5 percent y-o-y to market at Rp 8,728 a kilogram throughout the first half of 2014.
DSNG, on the other hand, tripled its net profit to Rp 367.36 billion in the first half of the year, compared with the Rp 114.85 billion generated in the same period last year
The company’s president director, Djojo Boentoro, said that the skyrocketing net profit was driven by gains in both CPO production and the average selling price in the first six months.
DSNG’s CPO output rose 30.2 percent over the same period last year, while its average selling price ascended 35.7 percent to Rp 8,780 per kilogram.
The palm oil companies’ rising profits were in contrast with their achievement last year, during which the country’s plantation firms saw their bottom line erode by plunging CPO prices due to unfavorable global economic conditions and sinking demand.
Kiswoyo Adi Joe, an analyst from Investa Saran Mandiri, warned that the astounding rise might not last until the end of the year, as first half performance was most likely driven by the global price jump in the first quarter of the year and the rupiah depreciation against the US dollar, which is favorable for export commodities.
“The CPO price is declining quarter-on-quarter, and El Nino — which is supposed to lead to a supply decline and rising prices — is estimated to be wetter than it was first projected. The rupiah is also estimated to rebound in the second half,” he said.
“CPO firms might conclude the year with a [net profit] rise of only 5 percent,” he said
Global prices started to gain a foothold late last year and went on to hit 2,916 ringgit a ton on the Bursa Malaysia Derivative on March 11, the highest level since September 2012. CPO prices on the Malaysian bourse, despite being traded 13 percent higher compared to the first half of 2013, have declined by about 4 percent to 2,576 ringgit per ton.
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