Kencana Agri (BNE) H2 2023 earnings summary

Executive summary

• FFB production rose 1.0% to 775,280 MT and CPO output increased 5.0% to 171,467 MT; FY2023 ended with a US$0.283m net loss.

• Lower selling prices and higher costs weighed on results; a US$2.8m foreign-exchange gain from IDR appreciation against USD partly offset the impact.

Financial highlights

• Revenue fell 10.6% to US$136.366m; gross profit declined 39.4% to US$26.418m and operating profit fell 62.3% to US$10.628m.

• EBITDA decreased 14.5% to US$34.446m; gross margin was 19.4%, down 9.2pp, and EBITDA margin was 25.3%, down 1.1pp.

• FY2023 recorded a US$0.810m loss before tax and a US$0.283m loss after tax, versus profits of US$3.025m and US$2.618m in FY2022.

• Revenue fell as CPO and palm kernel prices declined and third-party FFB sales volume decreased.

Outlook and guidance

• El Niño's projected impact on FFB yields is expected to weigh on CPO production; full B35 biodiesel implementation could lift domestic CPO demand and support prices in 2024.

• Focus areas include cost management, maintenance and harvesting practices, production yield, and overall efficiency.