Plantations Hit by Low Palm Oil Prices
Indonesian plantation companies have suffered dips in their income amid falling commodity prices in the global market.
Many companies such as Sampoerna Agro, Sinar Mas Agro reported lower earnings in the first half of this year as the selling price of palm oil declined amid the global economic slowdown.
Sinar Mas Agro and Technology, a plantation company that is part of Sinar Mas Group, reported a 4.1 percent decline in net income to Rp 1.11 trillion ($118 million) during the first half of this year from Rp 1.16 trillion a year earlier, the company reported on Tuesday. Its revenue fell 17 percent to Rp 13.59 trillion.
Sampoerna Agro, a palm plantation company, reported a 58 percent decline in its net income to Rp 149.88 billion, the company said in a filing to the Indonesia Stock Exchange on Tuesday.
Meanwhile, its revenue slipped 19 percent to Rp 1.39 trillion.
It attributed the decline to “mainly due to lower selling price and sales volume of its main products, the CPO and palm kernel, which when combined, contributed 97 percent of total revenue.”
The average CPO selling price at Sampoerna Agro fell 9.2 percent to Rp 7,623 per kilogram in the January-June period from the same period last year.
The company sold 86 percent of its CPO to the domestic market.
Leonardo Henry Gavaza, an analyst with Bahana Securities, said the first-half results represented 34 percent of the broker’s full-year estimate.
“Although we expect attractive long-term growth coming from new maturing nucleus estates, coupled with yield recovery in its Kalimantan estates, we expect negative earnings growth to materialize in 2012 as the increase in costs will not be matched by escalated production costs,” he said in his notes to clients on Tuesday.
Higher cost in Sampoerna Agro came from higher salary expenses.
First-half net income at BW Plantation, a smaller palm oil producer, dropped 9.8 percent to Rp 153.85 billion as selling prices for CPO dropped. However, its revenue rose 9.1 percent.
According to Indopremier Securities, the average selling price of CPO at BW Plantantion fell 1.7 percent to Rp 7,636 per kilogram from Rp 7,765 per kilogram.
Shares of BW Plantation rose 0.7 percent to Rp 1,480 at the Indonesia Stock Exchange on Tuesday.
Smart traded unchanged at Rp 6,450, while Sampoerna Agro lost 0.8 percent to Rp 3,000.