Tue, 01 Mar 2011


By Yuriy Humber
Golden Agri-Resources, the world’s second-largest palm oil producer, said fourth-quarter profits more than doubled as prices for its main product jumped to record highs and its assets gained in value.

Net income increased to $1.17 billion for the quarter ending on Dec. 31, compared with $473 million a year earlier, the Singapore-listed Indonesian company said on Monday. Profit, excluding gains from asset value upgrades and currency exchange gains, jumped 124 percent to $146 million. Sales rose 85 percent to $1.19 billion.

Crude palm oil futures gained 37 percent in the last three months of last year, the fastest quarterly gain since at least the middle of 2009 as yields fell in Malaysia and Indonesia, the top two regions for plantations, due to unseasonal rains.

While farmers raised crude oil prices, refiners of the plant, including Wilmar International, the world’s largest listed palm oil firm, saw profits drop as governments imposed caps on consumer goods to rein in inflation.

China’s imports of the oil advanced to 7.2 million metric tons last year from 6.4 million tons a year earlier, according to OCBC Investment Research.

India, the second-largest importer after China, bought seven million tons, compared with 6.4 million tons in 2009, OCBC said in a Feb. 8 report.

“Golden Agri should continue to get a good lift from the sustained run-up in crude palm oil prices over the next few months, underpinned by supply-side issues brought on by bad weather conditions in both Malaysia and Indonesia,” OCBC analyst Carey Wong said in the report.

Golden Agri posted a net gain of $1.37 billion after the value of its plantations was upgraded on higher palm oil prices, helping boost record full-year earnings. Its 2010 profit jumped 135 percent to $1.42 billion from sales of $3.5 billion.

Wilmar said last week that its profit was helped by a $251 million revaluation gain on current plantations and palm oil mills.

“Demand for palm oil is expected to be robust, especially from large developing countries such as China and India,” said Golden Agri’s chief executive, Franky Widjaja. “Global tightness of vegetable oil stocks is expected to remain.”

Palm oil output rose to 712,000 metric tons, 17 percent more than in the previous quarter, the company said.

Golden Agri said that it added 15,200 hectares of oil palm plantations last year, giving it 442,500 hectares, the most in Indonesia.