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 over 180,000 hectares of plantation land located in three provinces in Indonesia, namely, Central Kalimantan, West Kalimantan, and Riau.
In late February, Bumitama Agri reported its 2017 fourth quarter and full year earnings update. There are both positive and negative takeaways that investors may want to learn about. But first, let’s run through the company’s numbers.
Here’s a condensed income statement from Bumitama Agri for 2017’s fourth quarter:
Source: Bumitama Agri 2017 fourth quarter earnings presentation
We can see that Bumitama Agri did not enjoy a good quarter, with its revenue, gross profit, and net profit attributable to shareholders all down year-on-year.
Firstly, the average selling prices for crude palm oil (CPO), palm kernel (PK), and glycerin were up by 4.8%, 1.5%, and 610%, respectively, in 2017’s fourth quarter compared to the same period last year.
Secondly, Bumitama Agri’s extraction rates for CPO and PK improved in the reporting quarter by 0.4% and 14.0% year-on-year, respectively.
Thirdly, the company’s planted nucleus area increased by 2,455 hectares in 2017. Bumitama Agri ended 2017 with a total planted area of 182,675 hectares (comprising nucleus of 131,421 hectares, and planted plasma of 51,254 hectares).
Firstly, the company’s production volume for CPO was down by 16.7% in 2017’s fourth quarter, driven mainly by a fall in the production of fresh fruit bunches.
Secondly, Bumitama Agri’s sales volumes were down across the board across its product categories (CPO, PK, biodiesel, and glycerine) in the reporting quarter, resulting in the aforementioned year-on-year decline in revenue.
Lastly, its total borrowings stood at IDR 4,410 billion as of 31 December 2017, up from IDR 3,860 billion at end-2016. Meanwhile, its cash and equivalents decreased from IDR 517 billion to IDR 217 billion. Thus, Bumitama Agri’s balance sheet weakened with its net debt increasing from IDR 3,343 billion to IDR 4,193 billion.