PALM oil producer Golden Agri-Resources (GAR) posted an 18 per cent lower underlying profit of US$91 million for the third quarter of the 2024 financial year, from US$110 million in the second quarter.
In a bourse filing on Thursday (Nov 14), the company said that the decrease was driven by increasing financial expenses due to higher interest rates and greater income tax expenses, with more profits recorded in several subsidiaries operating in countries with higher income tax.
Revenue for the period grew 7 per cent to US$2.8 billion, from US$2.6 billion in Q2. This was driven by expanded sales volume and a slight increase in crude palm oil (CPO) prices, which offset weaker plantation output.
Earnings for Q3 FY2024 stood at US$118 million, up 80 per cent from US$65 million in the previous quarter. This was mainly driven by the foreign exchange gain recorded in the latest quarter.
Revenue for the nine-month period ended Sep 30 was up 8 per cent at US$7.9 billion, from US$7.3 billion in the corresponding period a year prior.
Underlying profit for the time period was 15 per cent lower at US$279 million, from US$327 million in the previous year. Earnings for the nine months stood at US$220 million, 12 per cent lower than US$250 million in the same period in FY2023.
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Fruit yield for the first nine months of 2024 fell to 12.8 tonnes from 14.4 tonnes per hectare in the same period in 2023, due to the impact from last year’s El Nino conditions and replanting preparation.
Recovery in production continued from Q2 of 2024 to Q3. However, palm-product output is still weak for the nine-month period at 1.9 million tonnes, compared with 2.2 million tonnes in the same period last year.
GAR expects the peak crop season to shift to the fourth quarter of this year.
The impact of El Nino in the second half of 2023 on Indonesia’s palm oil output was worse than initially estimated, the company noted. Crop losses due to unfavourable weather conditions have disrupted sunflower oil and rapeseed oil production.
While increases in the production of soybean oil have alleviated the supply crunch of global sunflower and rapeseed oils, prices remain elevated.
The markets are expecting a seasonally low production period for palm oil in the first half of 2025, when Indonesia is planning to implement an increased B40 biodiesel blending mandate.
Unpredictable weather and escalating geopolitical tensions remain key factors likely supporting vegetable oil prices.
GAR notes that the possibility of demand softening in the light of high prices in price-sensitive markets is an important factor to monitor.
Shares of GAR closed down 1.8 per cent or S$0.005 at S$0.275 on Thursday.
