Sampoerna Agro Sales Increase 30%. Palm oil (CPO) producer, PT Sampoerna Agro Tbk (SGRO) is currently boosting its palm oil production in the second half of this year. This is in line with market demand and prices for palm oil commodities. That have start to improve. Michael Kesuma, Head of Investor Relations at SGRO.
He said that CPO prices had previously fallen frequently. Now that it tends to rebound. We expect the volume (sales) to be better in the second half. He said that for now the price is quite stable at the level of Malaysian Ringgit (RM) 2,700 to RM 2,800 per ton. Where in the middle of the first half of this year the average price is still around RM 2,500 per ton.
Arm with a good price, Michael said that in the second semester. There might be an increase in sales volume of between 30% -50%. Compare to the first semester of 2020. Unfortunately, he did not explain the volume or tonnage sold. However, as an illustration, management had previously reveal.
That during the first semester of 2020. SGRO’s sales volume decrease by 9% on an annual basis. This year, said Michael, was a period full of challenges for this industrial sector. Due to the drought that was felt last year. Overall, this month’s production is still not as normal. As well as due to the impact of water shortages, he said.
It seems that this causes the supply of palm oil to shrink. So that the increase in price is a legal effect of supply-demand. This has cause SGRO’s net income during the first half of 2020. To continue to increase by 17.51% on an annual basis to Rp 1.60 trillion. Even though in terms of volume it has decrease.
Meanwhile, in the second semester, SGRO plans to continue to boost production. Management is confident that it will be able to maintain performance with all efficient operations. Michael said that, as a whole, until the end of this year, the management admitted it was difficult to grow the massive sales volume above last year.
Last year, SGRO was able to record an annual increase in sales volume of 12% to 409,000 tons. Previously, Sampoerna Agro’s (SGRO) performance was boosted by the increase in CPO prices in the first half of 2020. Sampoerna Agro recorded a brilliant performance in the first six months. During January – June 2020, SGRO shares posted net sales of Rp 1.60 trillion.
Or a double digit growth of 17.51% compared to net sales in the same period last year. Michael Kesuma explained that the growth on the net sales side was driven by the increase in the average selling price of crude palm oil (CPO) in the first semester. According to Michael’s notes, despite showing a downward trend in the first few months.
The selling price of CPO has tended to increase since entering the middle of May 2020. This was triggered by various things ranging from global demand for CPO which began to improve to the emergence of a number of positive sentiments such as rumors of a decreased realization of global CPO production and others.
As a result, if averaged over a full six months, the average selling price of CPO has increased by 26.22% from the original IDR 6,662 per kg in the first semester of 2019 to IDR 8,409 per kg in the first semester of this year, so that the company’s sales turnover also increases. In terms of volume, our sales fell 9% on an annual basis, said Michael.
To note, CPO sales do have a large contribution to SGRO’s total sales. For the first semester of 2020, for example, sales contributed around 84% of total sales. The rest, SGRO’s sales come from other products such as palm kernel or palm kernel (PK), and many more. Along with the increase in net sales.
SGRO also recorded an increase in expenses on a number of expense items. For example, cost of goods sold increased by 9.02% on an annual basis to Rp 1.23 trillion in the first semester of 2020. Previously, SGRO’s cost of goods sold only reached Rp 1.13 trillion in the first semester of 2019.
The increase in expenditure was also found in the sales and marketing expenses and finance costs. Launching the company’s financial statements, SGRO’s sales and marketing expenses increased by 5.96% yoy from Rp 41.39 billion in the first semester of 2019 to Rp 43.86 billion in the first semester of 2020.
Meanwhile, financial costs increased by 31.72% yoy from Rp 132.79 billion in the first semester of 2019 to Rp 174.92 billion in the first semester of 2020. However, the increase in expenditures on a number of expense items did not necessarily suppress SGRO’s bottom line performance.
After net sales were deducted by cost of goods sold, sales and marketing expenses, and other expenses, SGRO managed to pocket the profit for the period attributable to the owner of the parent entity, aka net profit of Rp. 971 million in the first semester of 2020. Previously, SGRO posted a net loss. Rp 19.22 billion in the first semester of 2019.
In the future, Michael is optimistic that CPO commodity prices will still have a positive prospect, at least in the third quarter of 2020. One of the positive catalysts comes from the increased demand for CPO, both in the energy sector for biofuel production as well as in the hotel, restaurant and cafe sector (horeka).
Along with the recovery of economic activity in a number of countries. Even so, these conditions did not necessarily make SGRO want to boost CPO production. Michael said that currently his party is still conducting a harvest readiness survey of its palm fruit. From the survey results, SGRO will later determine.
Whether the company will continue to pursue the previously set production targets or set revisions. Note, previously SGRO had targeted a production growth of 5% from nucleus plantations compared to last year’s realization. We can only get a clearer picture maybe around the end of August, said Michael.
So far, SGRO has absorbed IDR 217 billion of the total capital expenditure (capex) budget of IDR 600 billion in the first semester of 2020. About 70% of the capex absorption is used for investment and maintenance of plant assets, while the remaining 30% is for asset maintenance. remains such as buildings, road infrastructure, and so on.
The use of the remaining capex in the second semester will be adjusted to developments in conditions in the field.