The Good And Bad That Investors Should Know About Bumitama Agri Ltd’s Latest Earnings

Bumitama Agri Ltd  (SGX: P8Z) is a plantation company with primary business activities of cultivating oil palm trees, as well as harvesting and processing fresh palm fruit bunches (FFB) into palm oil and palm kernel. Its operations are located in three provinces in Indonesia, namely Central Kalimantan, West Kalimantan and Riau.

The company recently announced its 2018 first-quarter earnings. In this article, we will look at the positive and negative takeaways from the announcement.

But first, let’s run through the company’s numbers.

Source: Bumitama Agri results presentation

Overall, we see that most metrics were down on a year-on-year basis, with both revenue and net profit coming in lower by 9.1% and 16.8%, respectively, for the latest quarter.

The positives

Firstly, crude palm oil (CPO) production volume was up by 16.9% for the quarter, mainly driven by higher FFB production, which grew 19.1% year-on-year to 967,061 tonnes.

Secondly, sales volume was up across the board for the quarter. Volume for CPO was up 3.2% year-on-year to 205,859 tonnes while that for palm kernel was up 13.6% to 44,687 tonnes.

Thirdly, the gross margin for the reporting quarter grew to 27.2% from 25.8%. Similarly, the EBITDA (earnings before interest, tax, depreciation and amortisation) margin improved from 25.7% to 27.2% over the same period.

The negatives

Firstly, average selling price for CPO and palm kernel was down by 7.6% and 21.5%, respectively, as compared to the same period last year.

Secondly, CPO extraction rates declined from 23.1% last year to 22.8% this quarter.

Last but not least, Bumitama Agri’s total borrowings stood at IDR 4,989 billion, up from IDR 4,410 billion at end-2017. Meanwhile, its cash and cash equivalents improved from IDR 217 billion to IDR 247 billion. These numbers show that Bumitama Agri’s balance sheet had weakened during the period.

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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.