NORMALISED crude palm oil prices sent net profit for Golden Agri-Resources : E5H 0% falling 51 per cent to US$92 million in its first financial quarter ended Mar 31, from US$188 million the year before.

In a performance update on Friday (May 12), the mainboard-listed palm oil company said the market price for FOB Belawan crude palm oil for the quarter dropped 37 per cent on year, averaging US$900 per tonne compared with US$1,579 per tonne a year earlier.

Revenue for Q1 fell 6 per cent to US$2.54 billion, from US$2.7 billion previously, with expanded sales volume partly offsetting lower average selling prices.

Earnings before interest, taxes, depreciation and amortisation (Ebitda) stood at US$247 million, maintaining a resilient margin of 9.7 per cent. This came even as Ebitda fell 34 per cent from US$372 million the previous year.

Golden Agri noted that it maintained a gearing ratio of 0.54 times, and a low net debt to Ebitda of 0.08 times.

Overall, the group said its first-quarter performance “demonstrated the company’s resilience” amid lower crude palm oil prices, coming on the back of a record year in 2022.

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Even as Golden Agri’s plantation business experienced a fall in output and higher fertiliser costs, it was partly compensated by the higher merchandising volume of the downstream business, it added. 

This is “another testament to the ability of (Golden Agri’s) integrated business model to mitigate the impact of volatile markets”, it said.

Nevertheless, Golden Agri said it expects global vegetable oil supply and demand dynamics to remain tight for the next quarter. It pointed out that continuing geopolitical tensions and uncertain weather conditions may slow down production recovery. 

As for palm, production growth will be curbed by the industry’s ageing trees, replanting activities, and the increasing chance of El Nino that is predicted to start in the second semester of the year, it said.

However, global palm oil demand is being sustained by a robust consumption of food, industrial, and bio-energy products, and will be further supported by rising biodiesel mixture mandates in various countries.

Such mandates include the Indonesian B35 mandate being on track, Golden Agri noted, referring to the Indonesian government’s target of producing fuel using a 35 per cent blend of palm oil this year, up from 30 per cent.

Shares of Golden Agri rose 1.9 per cent or S$0.005 to end at S$0.27 on Friday, before the announcement.