Astra Agro Sets Long-Term Goals Amid CPO Weakness
PT Astra Agro Lestari Tbk, the country’s biggest producer of crude palm oil, on Friday confirmed its readiness to face the global economic downturn.
Santosa, the company’s director of finance, said Astra Agro would survive the current CPO market volatility, “even if crude palm oil prices decline as low as $300 per metric ton.”
CPO had been as high as $1,321 per ton in March of this year, but then tumbled to a low of $386.36 on Oct. 24. Recently, prices have stabilized near $400, with the commodity closing at $444.32 per metric ton on Friday.
Santosa added that, as a firm with a long-term vision, Astra Agro believed “the current downturn would be a good opportunity to grab newer plantation firms.”
Asked by reporters which companies Astra Agro might acquire, Santosa declined to name any firms, but he did acknowledge that the company had received several offers from small and relatively young plantation companies.
“However,” Santoso explained, “as their offer prices were not low enough for us, we think we’d be more interested if they were ready to offer a ‘cut loss’ price.”
In the meantime, the company plans to focus on three strategies during the downturn.
“First,” Santosa said, “we will continue our maintenance efforts, our fertilizing, and continue to replant our old farms, so that we can reap the fruits of those efforts three to five years from now.”
Second, Astra Agro plans to maintain its infrastructure, including roads and warehouses, to keep costs competitive.
Third and finally, the company aims to maintain its yield rate, “as we currently have a quite optimum average palm plant age of between 14 and 15 years,” Santosa said.
Astra Agro posted financial growth in September of this year, but analysts expect the company to expand more slowly next year.
Some analysts suggest that Astra Agro might generate Rp 8.3 trillion ($697.2 million) in revenue this year, although they project that figure to fall to about Rp 4 trillion ($336 million) next year due to depressed CPO prices.
Santosa, the company’s director of finance, said Astra Agro would survive the current CPO market volatility, “even if crude palm oil prices decline as low as $300 per metric ton.”
CPO had been as high as $1,321 per ton in March of this year, but then tumbled to a low of $386.36 on Oct. 24. Recently, prices have stabilized near $400, with the commodity closing at $444.32 per metric ton on Friday.
Santosa added that, as a firm with a long-term vision, Astra Agro believed “the current downturn would be a good opportunity to grab newer plantation firms.”
Asked by reporters which companies Astra Agro might acquire, Santosa declined to name any firms, but he did acknowledge that the company had received several offers from small and relatively young plantation companies.
“However,” Santoso explained, “as their offer prices were not low enough for us, we think we’d be more interested if they were ready to offer a ‘cut loss’ price.”
In the meantime, the company plans to focus on three strategies during the downturn.
“First,” Santosa said, “we will continue our maintenance efforts, our fertilizing, and continue to replant our old farms, so that we can reap the fruits of those efforts three to five years from now.”
Second, Astra Agro plans to maintain its infrastructure, including roads and warehouses, to keep costs competitive.
Third and finally, the company aims to maintain its yield rate, “as we currently have a quite optimum average palm plant age of between 14 and 15 years,” Santosa said.
Astra Agro posted financial growth in September of this year, but analysts expect the company to expand more slowly next year.
Some analysts suggest that Astra Agro might generate Rp 8.3 trillion ($697.2 million) in revenue this year, although they project that figure to fall to about Rp 4 trillion ($336 million) next year due to depressed CPO prices.