SGX Mainboard-listed IndoAgri, a diversified and integrated agribusiness group and manufacturer of leading brands of edible oils and fats products in Indonesia, reported a 18% revenue decline in 2Q18 on lower sales from Plantation and Edible Oils & Fats (EOF) Divisions.

Plantation Division reported 13% and 25% revenue decline in 2Q2018 and 1H2018 due to lower average selling prices and sales volume of CPO, palm kernel (PK) and rubber. Notably CPO sales volume were affected by the timing in CPO stock realisation.

"We have acquired our third mill (Vale do Pontal) in July 2018, which has a crushing capacity of 2.5m MT of cane. The acquisition will enable CMAA to expand its footprint in the sugar and ethanol industry in Brazil with a total annual cane crushing capacity increasing from 5.8 million MT (CMAA plus Canapolis mill) to 8.3 million MT. All 3 mills are located in the state of Minas Gerais, and in close proximity to each other, forming a strong cluster enabling operating and management synergies,” commented Mr Mark Wakeford, CEO and Executive Director.

“The Group’s fresh fruits bunches (FFB) nucleus and CPO production recovered in 2Q2018, growing 8% over 2Q2017. On year-to-date basis, FFB nucleus increased 1% but CPO production declined 2% on lower purchase of FFB from external parties. The Group’s performance in 2Q2018 and 1H2018 were affected by CPO inventory build-up, lower commodity prices and forex impacts.

The group reported net losses after tax of Rp99 billion and Rp46 billion in 2Q2018 and 1H2018 compared to profit positions in the comparative periods last year.

The Group is expanding its milling capacity with one new palm oil mill due for completion in 2019. The expansion of our refinery in Surabaya is completed and in operation, increasing the refinery capacity by 300,000 tonnes per annum.

In particular, Plantation sales were affected by approximately 29,000 MT of Crude Palm Oil (CPO) inventory build-up in 1H2018 compared to approximately 36,000 MT of inventory drawdown in 1H2017, and lower external sales.

The Group’s gross profit declined 20% and 30% in 2Q2018 and 1H2018 respectively mainly due to the effects of lower sales volume and selling prices of palm products.