Rotting reaps: Bumitama’s fresh fruit production plunged 17.3%

Will the new 396 ha planting land save it from falling further?

Bumitama is still reaping the ill effects of El Niño as its production dwindled 17.3% YoY in 1H16, quite close to analysts’ forecast of -13%.

RHB’s review revealed that the decline was also way lower than Bumitama’s original 8% FFB growth outlook. Recently, the company adjusted its FY16 projections to -5 to -10% YoY FFB growth projection, RHB added.

Despite growing unlikeliness of a La Niña, FFB growth projection for Bumitama is stuck at -13.1% for FY16.

“It will be followed by an increase of 17-20% in FY17-18, as we assume a strong recovery in 2017, barring any unforeseen weather conditions,” RHB said.

Meanwhile, Bumitama’s planted area increased by 2,554ha in 1H16. However, only 396ha was for actual planting, while the rest came from a landbank acquisition completed in 1Q16.

The business is not keen on acquiring more landbank towards the end of the year due to intensified environmental regulations. On top of this, it has already reached its 5,000ha new planting target including acquisitions, summing up the total new planted area to 7,190ha in 1H16.