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Wednesday, March 20, 2013

Bumitama Agri Reports FY12 Results


Crude palm oil (CPO) and palm kernel (PK) producer Bumitama Agri (Bumitama), has released their FY12 earnings results. Despite the lower CPO prices, which has an impact on overall margins across palm producing players in the market, Bumitama has managed to turn in a 25.7 percent increase in revenue to IDR 3,525,546 million, and a 3.4 percent increase in earnings to IDR 787,896 million for FY12. The revenue growth was largely due to an increase in sales volume of both CPO and PK. Foreign exchange loss, which has partially offset gain on hedging transactions, and a lower gain recognised from fair value changes in biological assets were also seen for Bumitama’s FY12.
On the overall front, cost increases were largely in line with the increased sales. Selling expenses however saw a 93.6 percent spike for 4Q12. Much of this was attributable to costs related to increased manpower, higher wages and a switch to transport it palm products by trucks instead of via vessels.
The switch was necessary as a result of acute weather conditions at sea and thus the option of transportation via trucks (which costs more) was used. When asked if Bumitama will be looking to purchase their own vessels for smoothing out future deliveries, Bumitama mentioned that this is already in their pipeline and they are expecting two vessels to be delivered in the first half of 2013.
On the operational front, Bumitama has also reflected strong production numbers, with FY12’s CPO output reaching a high of 462,291 MT. This is a 34 percent increase compared to that of 2011. Its extraction rate of 23.8 percent remains an industry high, underscoring Bumitama’s operational efficiency.
Although CPO prices are still expected to be relatively flattish, which will also be coupled with macroeconomic challenges, Bumitama opines that its strong fundamentals as a young, fast growing plantation player with significant land bank and strategic growth plans will be a good anchor for its performance.
Bumitama’s trees are mostly relatively young and as more trees reach their prime producing years, production and a good harvest will be expected to be seen over the next few quarters.
When asked about its dividend policy, of whether there would be any pay out of such in 2013, Bumitama said that a pay-out might be “possible”, but this is still largely in the deliberation stage.
Bumitama’s stock price opened at $1.05 on 27 Feb 2013, and was seen trading at a high of $1.06 as at 10am.

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