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The Good And Bad That Investors Should Know About Bumitama Agri Ltd’s Latest Quarterly 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 180,000 hectares of plantation land located in three provinces in Indonesia, namely, Central Kalimantan, West Kalimantan, and Riau.

In mid-November, Bumitama Agri reported its 2017 third quarter earnings. There are both positive and negative takeaways that investors may want to learn about. But first, let’s run through the company’s numbers.

The results

Here’s a condensed income statement from Bumitama Agri for the third quarter of 2017:


Source: Bumitama Agri 2017 third quarter earnings presentation

Bumitama Agri handed in a good set of numbers, as revenue was up 37.2% year-on-year, and net profit was up 30.3%.

The positives

Firstly, Bumitama Agri’s sales volumes grew across the board. Crude palm oil (CPO) volume increased by 39.4% year-on-year to 217,367 metric tons (MT), palm kernel (PK) volume jumped 58.7% to 44,183 MT, biodesel volume grew 14.4% to 10,035 MT, and glycerin volume soared 47.3% to 1,712 MT.

Secondly, the company’s operational metrics came in stronger in 2017’s third quarter as compared to a year ago. Its fresh fruit bunches (FFB) yield improved from 3.7 tonnes/ha (tonnes per hectare) a year ago to 4.3 tonnes/ha, while the CPO extraction rate inched up from 22.4% to 22.5%.

Thirdly, Bumitama Agri’s operating cash flow in the third quarter of 2017 improved to IDR 448.2 billion as compared to IDR 80.0 billion in the third quarter of 2016. The higher cash flow was due to better cash-collection from customers.

The negatives

Firstly, Bumitama Agri’s expenses for the third quarter of 2017 grew faster than revenue, mainly due to higher general and administrative costs, as a result of an increase in land & building taxes as well as salaries and employee benefits, training, and professional fees.

Secondly, the company’s net borrowings increased from IDR 4,351 billion at the end of 2016 to IDR 4,462 billion in the third quarter of 2017.

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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.