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

Bumitama Agri Ltd  (SGX: P8Z) is a palm oil producer. The company has over 180,000 hectares of plantation land located in three provinces in Indonesia, namely, Central Kalimantan, West Kalimantan, and Riau.

Recently, it announced its second quarter earnings update for the year ending 31 December 2018. In this article, I will look at the positive and negative points from the update.

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Summary of key financial metrics

Source: Bumitama Agri Results Presentation

The above is a table from Bumitama’s latest results presentation.

Overall, we see that all metrics improved on a year-on-year basis, with both revenue and net profit attributable to shareholders coming in higher in the quarter by 22.4% and 36.1%, respectively, as compared to last year.

The positives

Firstly, plantation metrics came in stronger with fresh fruit bunches (FFB) harvested growing 22.6% year-on-year in the quarter to 1.6 million tonnes, and FFB yield increasing by 19.8% year-on-year to 9.7 metric tonnes/hectare.

Secondly, sales volume for the company’s two main products was up during the quarter. Volume for crude palm oil (CPO) was up 28.1% year-on-year to 266,802 tonnes while that for palm kernel was up 31.2% to 49,706 tonnes.

Last but not the least, gross margin percentage for the reporting quarter grew from 29.3% in the corresponding period last year to 32.4% this quarter. Similarly, the EBITDA (earnings before interest, taxes, depreciation, and amortisation) margin percentage improved from 31.5% to 34.2% over the same period.

The negatives

Firstly, the average sales price of the company’s products fell during the quarter. The price for CPO declined by 3.4% to IDR 7, 786 per kg while that of palm kernel dropped 1.3% to IDR 5, 482 per kg.

Secondly, CPO extraction rate was down from 22.7% last year to 22.0% in the reporting quarter.

Lastly, Bumitama Agri generated operating cash flow of IDR 387 billion in the quarter, down from IDR 537 billion in the same period last year. This was driven by negative working capital movements.

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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.