Golden Agri-Resources Ltd (GAR) has reported a robust financial performance for the year 2023, indicating a return to normalcy after the unprecedented surge in crude palm oil (CPO) prices observed in 2022.
Mr. Franky O. Widjaja, Chairman and CEO of GAR, expressed satisfaction with the company’s achievements in 2023. He attributed the success to strong performance in both upstream and downstream operations, underscoring the resilience of GAR’s integrated business model. Leveraging technological advancements and a steadfast commitment to sustainability, GAR aims to strengthen its competitive position across the value chain, ensuring sustainable growth amidst evolving industry dynamics.
In 2023, GAR recorded a 15% year-on-year decline in revenue to US$9.76 billion, primarily due to lower CPO prices, although this was partially offset by increased sales volume. The company achieved an EBITDA of US$986 million with a healthy margin of 10%. Underlying profit and net profit stood at US$328 million and US$198 million, respectively.
Looking ahead, Mr. Widjaja highlighted expectations of palm oil supply constraints in 2024 due to El Niño conditions, coupled with low seasonal production in the first half of the year. However, sustained demand for palm oil, driven by its diverse applications including food, biodiesel, and biomass alternatives, is anticipated. While optimistic about the long-term prospects of the palm oil industry, GAR remains cautious of geopolitical tensions and economic volatility.
To balance shareholder returns with maintaining a robust balance sheet amidst global challenges, the Board proposes a final dividend of 0.613 Singapore cents per share or approximately US$59 million, representing 18% of underlying profit. The proposed dividend is subject to approval at the 2024 Annual Meeting.
Segment-wise performance analysis reveals growth in both plantation and downstream operations. Despite challenges like El Niño, GAR successfully replanted old estates, maintaining an average plantation age of 16 years. Fruit yield in the second half of 2023 increased by 20%, contributing to segmental EBITDA growth and sustaining long-term growth from existing plantations.
In the downstream segment, sales volume expanded by 12% to 10.9 million tonnes, generating US$9.6 billion in revenue. Despite lower selling prices, downstream operations remained robust, contributing significantly to GAR’s consolidated EBITDA.
GAR continues to prioritize sustainability initiatives to meet the demand for sustainable products and adapt to regulatory changes. The company has achieved high traceability levels in its palm production and supply chain, underscoring its commitment to sustainable practices and compliance with NDPE commitments. Additionally, GAR remains vigilant against fire and haze risks, leveraging technology and community engagement to prevent and manage such incidents effectively.
In summary, GAR’s solid performance in 2023 reflects its resilience, strategic focus, and commitment to sustainable growth amidst industry challenges.
