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Integrated operations and downstream sales contribute to resilient financial performance for GAR in Q1 2024
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EBITDA margin sustained in Q1 2024 above nine percent
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Net profit was impacted by foreign exchange losses, interest expense and lower yields due to El Niño
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The financial position remained robust, with a low leverage ratio of 0.56 times
SINGAPORE, May 15, 2024 /PRNewswire/ — The financial performance of Golden Agri-Resources Ltd (“GAR” or the “Company”) in the first quarter of 2024 continued to demonstrate the resilience of the integrated agribusiness in the face of weaker market prices CPO. Despite an 8% annual reduction in the CPO (FOB Belawan) market price, from an average of US$990 per ton in the first quarter of 2023 to US$910 per ton in the same period this year, the increase in the volume of Sales partially offset the impact of lower prices to deliver an annual increase in revenue to $2.56 billion.
GAR’s financial results for the first quarter of 2024 demonstrate continued resilience for integrated agribusiness.
EBITDA for the quarter was $231 million, maintaining a margin of over nine percent, while underlying profit and net profit fell by $79 million and $37 million, respectively.
The declines were driven by lower plantation production and exchange rate losses compared to the first quarter of last year; higher interest expenses, in line with market trends; and seasonality of general and administrative expenses incurred in the first quarter of this year, as opposed to the second quarter of the previous year.
GAR’s financial position remains robust due to an improved leverage ratio of 0.56x and a net debt/EBITDA of 0.28x.
In perspective, Franky O. Widjaja, President and CEO of GAR, commented: “Palm oil availability was notably limited in the first quarter of 2024, due to a combination of low seasonal yields exacerbated by the El Niño phenomenon which peaked in the third quarter of 2023. While supply constraints will gradually ease in the In the coming quarters, growth prospects are expected to be limited. Furthermore, the continued escalation of geopolitical tensions and climate fluctuations will sustain uncertainty in the vegetable oil sector. year.
The decline in palm product production was offset by higher downstream sales volume.
As of March 31, 2024, GAR’s planted area remained at approximately 532 thousand hectares, of which 494 thousand hectares were mature. The core and plasma properties represented 417,000 and 115,000 hectares of this area, respectively.
Fruit production in the first quarter of 2024 decreased six percent year-on-year, from 4.16 tonnes to 3.89 tonnes per hectare, as the impact of last year’s El Niño conditions began to materialize, in addition to preparing the Company’s old properties for replanting. However, this deficit was partially mitigated by increased purchases of fruit from third-party suppliers, limiting the decrease in production of palm products to four percent in the quarter, at 590,000 tonnes, compared to 617,000 tonnes in the same period last year.
The story continues
GAR’s downstream business successfully increased its sales volume by ten percent year-on-year in the first quarter of 2024, mainly due to refined palm products.
GAR continues to focus on adding value to its products and services to increase margins. This includes leveraging innovation and agro-scientific technology to optimize productivity and maintain cost competitiveness, while practicing sustainable production. GAR is also exploring new areas of growth, such as alternative biomass products and other sustainability initiatives.
The Company is also expanding its commitment to supply chain traceability to include its global supply chain. For the first time in 2024, GAR began implementing Traceability to Mill (TTM) in its palm supply chain outside of Indonesia. All suppliers of 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 of its supply chains for non-palm products.
In Indonesia, GAR achieved 99 percent traceability to plantation (TTP) in the first quarter of 2024, sustaining its efforts to improve sustainable practices throughout its supply chain and ensure it meets its Non-Profit commitments. Deforestation, No Peat and No Exploitation (NDPE). . These efforts are key to helping the GAR comply with future regulations such as the EU Deforestation Regulation (EUDR).
GAR has taken a structured and comprehensive approach to calculating its carbon emissions in scopes 1-3 and identifying a path to Net Zero by 2050. This data will inform the Company’s decarbonization strategy and roadmap, which is expected to be completed this year, focusing on reducing emissions in four areas: implementing No Deforestation and No Peat commitments; carry out carbon sequestration through carbon removal initiatives; prevention and use of methane; and renewable energy for heat and power.
About Golden Agri-Resources Ltd (GAR)
GAR is a leading, fully integrated agribusiness company. In Indonesia, manages an oil palm plantation area of 532,488 hectares (including small plasma producers) as of March 31, 2024. Integrated operations focused on technology-driven production and distribution of an extensive portfolio of palm-based products across the its established international marketing. network.
Founded in 1996, GAR was listed on the Singapore Exchange in 1999 and has a market capitalization of US$2.5 billion as of March 28, 2024. Flambo International Limited, an investment company, is the largest shareholder of GAR, with a share of 50.56 percent. Furthermore, GAR’s subsidiary PT SMART Tbk was listed on the Indonesian Stock Exchange in 1992.
As an integrated agribusiness, GAR offers an efficient end-to-end supply chain, from responsible production to global delivery. In Indonesia, its main activities include growing and harvesting oil palm; the processing of fresh fruit bunches into crude palm oil (CPO) and palm kernel; refine CPO into value-added products such as cooking oil, margarine, vegetable shortening, biodiesel and oleochemicals; as well as marketing palm products around the world.
GAR’s products are delivered to a diverse customer base in more than 100 countries through its global distribution network with transportation and logistics capabilities, destination marketing, onshore refining and ex-tank operations. GAR also has complementary businesses such as soybean products in China, sunflower products in India and sugar businesses.
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SOURCE Golden Agri-Resources