Indonesia Golden Agri posts record H1 net profit

13 August 2008 04:00  [Source: ICIS news]

SINGAPORE (ICIS news)--Indonesia-based Golden Agri-Resources (GAR) posted a record first half net profit of $1.02bn (€ 683m) from $447m in the previous corresponding period, the company said in a filing to the Singapore Exchange late on Tuesday.

The firm attributed its record showing to a 31% increase in sales volume due to improved crude palm oil (CPO) production and meeting higher downstream demand with the start of its new 300,000 tonne/year refinery in south Kalimantan back in May 2008.

“GAR also benefited from the increase in the CPO market prices. For the first half of 2008, the average CPO market price rose to $1,097/tonne, an increase of 76% over the previous corresponding period”, the company stated.

Revenue more than doubled to settle at $1.56bn from $682m year-on-year.

GAR also explained that it has, through the period, rigorously managed and controlled production costs, in particular, fertiliser costs that allowed for the achievement of higher margins.

Looking forward, the company expects for the demand for palm oil to be well-supported into the medium to long term by the consumption of edible oils by the growing middle class in major developing economies such as China, India and Pakistan.

“The fundamental industry factors affecting CPO prices remain valid. The strong global demand for palm oil, especially from developing countries is expected to continue,” said Franky Widjaja, CEO.

“A high barrier of entry persists in the industry and a long lead time is required to increase CPO production”, he added.

GAR also intends to further increase plantation yields, extraction rates and harvesting productivity by expanding its planted area by 40,000 to 60,000 hectares this year through new planting and opportunistic acquisitions.

($1 = € 0.67)

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By: Bohan Loh
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