MENU

3 Things Investors Should Know About Bumitama Agri Ltd’s Latest 2017 Second Quarter Earnings

Bumitama Agri Ltd (SGX: P8Z) is a palm oil producer. Its primary business activities are the cultivation of oil palm trees, the harvesting of fresh palm fruit bunches, the processing of the bunches into crude palm oil and palm kernel oil, and the sale of the oils to refineries. The company has 179,273 hectares of plantation land located in three provinces in Indonesia, namely, Central Kalimantan, West Kalimantan, and Riau.

In mid-August, Bumitama Agri reported its 2017 second quarter earnings. Let’s take a look at three useful pieces of information investors may want to know from the announcement:

1. The overall result

The following table shows some important numbers from Bumitama Agri’s income statement for the second quarters of 2017 and 2016:


Source: Bumitama Agri 2017 second quarter earnings presentation

We can see that Bumitama Agri’s revenue and net profit both showed strong growth compared to a year ago. The company’s growth was driven mainly by higher crude palm oil (CPO) prices and higher sales volumes.

2. Operational statistics

Bumitama Agri’s operational statistics are just as important to track for investors as its financial numbers. Here’s a table showing the company’s plantation-related figures, and the efficiency of its factory operations, for the second quarters of 2017 and 2016:


Source: Bumitama Agri 2017 second quarter earnings presentation

The company’s quarterly FFB (fresh fruit bunches) production was up significantly year-on-year (63.4%) due to a recovery from impacts of the El-Nino weather phenomenon. The FFB yield also improved markedly (up 84%) from the second quarter of 2016.

The only blemish is the company’s CPO extraction rate, which declined marginally by 0.4%.

3. What lies ahead

As investors, we rely on many tools, including management’s forecasts, to help us gain insight on what to expect for the near- to long-term performance of our investments’ businesses.

With regard to Bumitama Agri, this is what the company said about its future in its earnings release:

 “The recovery of palm oil production will continue for the second half of 2017. The downward pressure on CPO prices could be very gradual going into the second half of 2017, unless there is fresh positive news which can lift palm prices from its current level. Notwithstanding, the palm oil industry remains positive, supported by growing domestic and emerging market demand and Biodiesel blending mandate, B20 of Indonesia.

The Group remains positive on the long term outlook of the palm oil industry and will continue to focus on yield improvement as well as cost management.”

If you like what you've seen, you can get even more investing insights and analyses from The Motley Fool's investing newsletter Take Stock Singapore. It's FREE, so do check it out here.

Also, like us on Facebook to follow our latest news and articles. The Motley Fool's purpose is to help the world invest, better.

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.