Golden Agri-Resources Ltd (“GAR” or the “Company”) continued to perform robustly during the first semester of 2022, delivering a strong set of results amidst increased volatility in the industry.
EBITDA reached US$807 million, a 54 percent increase year on year. Underlying profit and net profit were also strong at US$407 million and US$390 million, respectively. This performance was achieved on the back of a 23 percent year-on-year increase in revenue to almost US$5.5 billion, mainly attributable to the continued appreciation of CPO market prices. Upstream and downstream businesses contributed to the excellent results in the first half of 2022.
On the results, Mr Franky O. Widjaja, GAR Chairman and Chief Executive Officer, commented: “The Board is satisfied with GAR’s performance in the first six months of 2022. Our integrated business model has helped GAR to weather the industry volatility during the period. In addition, with our broad product portfolio, strategic logistics assets and capability, and a large pool of destination customers, GAR has effectively distributed products worldwide.
With its confidence towards the Company’s performance, the Board declares the distribution of an interim dividend of 0.800 Singapore cents per share.” Mr Widjaja added: “Solid fundamentals of global vegetable oil supply and demand persist. Weather conditions in some oilseed-producing countries are recovering. However, palm oil has experienced slow production growth, while global demand, on the other hand, continues to be strong.”
Plantations and palm oil mills
As of 30 June 2022, GAR’s planted area stood at 538 thousand hectares, of which 21 percent is owned by plasma smallholders. From 508 thousand hectares of its mature area, fruit harvested during the first half of 2022 totalled 4.8 million tonnes, a year-on-year decline of eight percent as affected by a shift in production seasonality.
Palm product output declined accordingly to 1.5 million tonnes during the period. CPO price appreciation offset lower plantation output, with upstream EBITDA reaching US$520 million for the first half. EBITDA margin expanded to 42 percent from 35 percent in the same period last year.
Palm, laurics, and others
The downstream business primarily consists of the processing and merchandising of palm and oilseed-based products comprising bulk and branded products, oleo-chemicals, and other vegetable oils, as well as the production and distribution of other consumer products.
The palm, laurics, and others segment generated around US$5.5 billion in revenue during the first half of 2022, 23 percent higher than last year. The increase primarily came from higher average selling prices, compensating for the decrease in sales volume due to the temporary export ban implemented in May 2022.
As a result, the segmental EBITDA grew 82 percent to US$288 million, achieving a record first half for this business. In addition, through optimal utilisation of our integrated business model, downstream delivered a higher margin of 5.3 percent from 3.6 percent last year.
The latest measures taken by the Indonesian Government in July 2022 have encouraged the export of palm oil products to reduce Indonesian stock levels. GAR supports the government’s policy in safeguarding the country’s domestic requirement of cooking oil.