Golden Agri-Resources achieved record net profit of US$1.42bn in 2010

Full year core net profit almost doubled to US$387 million, while EBITDA reached US$661 million.

According to Golden Agri-Resources, the Group recorded their best performance to date for its full financial year eneded 31 December 2010. This was supported by appreciation of Crude Palm Oil (“CPO”) prices and recovery in fruits production. Revenue reached US$3.50 billion or a 53% increase compared to the previous year, while net profit more than doubled to US$1.42 billion.

Continued strong recovery in production accompanied by a 56% rise in CPO FOB prices year-on-year resulted in outstanding 4Q 2010 performance with EBITDA of US$237 million and core net profit of US$146 million. This solid quarterly performance led to full year EBITDA of US$661 million, 65% higher than last year, and a 91% increase in core net profit to US$387 million, despite slightly lower palm products output due to unfavourable weather conditions.

The Board proposes a final dividend of 0.77 Singapore cents, 56% higher than last year, after considering the capital expenditure target for 2011 and strategic acquisition opportunities that might arise. This dividend will be distributed in May 2011, after obtaining shareholder approval.

As at end of 2010, GAR’s financial position remained at a healthy level with a low gearing ratio. Total assets grew sizeably by 28% to US$10.1 billion compared to US$7.9 billion last year, mainly due to organic expansion and acquisition, as well as a net gain recorded from changes in fair value of biological assets.

Commenting on the results, Mr Franky Widjaja, Chairman and Chief Executive Officer of GAR said: “GAR has benefited from its consistent best-in-class plantation operations as well as the strong industry outlook and this is demonstrated by our record performance in 2010. The Board is delighted with this excellent accomplishment and we will continue to be prudent in executing our operational strategy, leveraging our core competitiveness and capturing any strategic opportunities that may arise, in order to continue delivering long-term shareholders’ returns.”

Operational Highlights 

In 4Q 2010, production recovery was sustained achieving palm products output of 712,000 tonnes, 17% stronger than the previous quarter and the highest on record for GAR. However, the full year palm products output was unable to catch up with last year’s output, due to lower production resulted from heavy rainfall in the earlier part of the year, and was recorded at 2.27 million tonnes, 3% below the 2009 output.

Despite unfavourable weather conditions experienced in Indonesia during 2010, GAR successfully expanded its planted area through new planting by approximately 15,200 hectares, bringing its total planted area to 442,500 hectares at the end of the year, and continues to be the largest in Indonesia. Likewise, mature area grew by 8.8% to 363,500 hectares during 2010.

The age profile of GAR’s plantations remains favourable, comprising 18% of immature area, 16% at young age, and 50% of trees in their prime producing years. GAR will continue its strategy to sustainably expand its oil palm plantation area in order to maintain its long-term growth.

Outlook and Strategy 

With the foundation of best plantation management, sustainable and prudent business expansion as well as a healthy financial position, GAR remains well-placed to benefit from the strong long-term fundamentals of the palm oil industry.

Mr Widjaja added: “Demand for palm oil is expected to be robust, especially from large developing countries, such as China and India. Global tightness of vegetable oil stocks is expected to remain, thus providing support to palm oil prices. By expanding its upstream and downstream businesses as well as its distribution capabilities, GAR is ready to capture the growing demand in the long-term, and retain its leadership position of developing sustainable palm oil production.”