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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. Recently, it announced its third 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.

Summary of key financial metrics

Source: Bumitama Agri Results Presentation

Positives

Firstly, plantation metrics came in stronger in the quarter, with internal fruit bunches (FFB) harvested up by 36.8% year-on-year to 935,692 tonnes while FFB yield per hectare improved from 4.3 tonnes/hectare to 5.8 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 10.6% year-on-year to 240,421 tonnes while that of palm kernel grew 29.1% to 57,050 tonnes.

Last but not least, gross margin and EBITDA margin improved on a year-on-year basis, mainly due to lower price paid for external FFB.

Negatives

Firstly, the average sales price of the company’s products fell during the quarter. The price for: (a) CPO declined 12.5% to IDR 6,807 per kg; and (b) that of palm kernel dropped 17.8% to IDR 4,943 per kg.

Secondly, CPO extraction rate was down from 22.5% last year to 21.7% this quarter.

Last but not the least, Bumitama Agri generated operating cash flow of IDR 352 billion in the quarter, down compared to IDR 448 billion in the corresponding quarter last year.

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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.