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Financial Performance
Overview: : Palm oil prices rebounded significantly after a stable 2023, trading at their largest premium over soybean oil in 40 years. Higher CPO consumption in the domestic biodiesel sector, coupled with lower yields from adverse weather, tightened supply and pushed domestic CPO prices (KPB) upwards by 17% to an average of Rp13,190 per kg, with CPO prices (CIF Rotterdam) increasing 15% to an average of USD1,113 per tonne in 2024.In line with higher commodity prices, the Group delivered a strong set of 2H2024 results with net profit after tax increasing 75% over the same period last year. The improved profitability was mainly due to significantly higher gross profit from the Plantation Division and higher net gains arising from changes in fair value of biological assets. This was partly offset by an increase in other operating expenses arising from impairment loss and write-off of fixed assets, and higher income tax expenses. On a full year basis, net profit after tax rose significantly to Rp2,110 billion versus Rp936 billion in FY2023. The improved profitability was likewise driven by similar reasons as in 2H2024.
Segment Overview: The Plantation Division recorded a 1% decline in FFB nucleus production in 2H2024 and FY2024, with full year CPO production remained flat at 706,000 tonnes. Our production was impacted by wet weather and lower yields from aging trees. Despite this, the Division's revenue rose by 18% and 10% in 2H2024 and FY2024 respectively mainly due to higher selling prices of palm products, partly offset by lower CPO sales volume due to timing in the realisation of year-end stocks.
The Plantation Division reported significantly higher operating profit in 2H2024 and FY2024, increasing 76% and 102% over the same periods last year. The increase was mainly attributable to strong palm product prices and lower nucleus palm production costs, arising from lower fertiliser expenses, tighter cost controls and higher net gains arising from changes in fair value of biological assets. This was partly offset by an increase in other operating expenses arising from impairment loss and write-off of fixed assets.
The EOF Division remained resilient, maintaining profitability by boosting sales volumes of cooking oils and margarines to meet domestic demand. Furthermore, it implemented competitive pricing strategies that facilitated regular price adjustments, ensuring continued profitability while ramping up advertising and promotions. As a result, this Division's revenue increased 21% and 9% in 2H2024 and FY2024, driven mainly by higher sales volume and selling prices. Full year operating profit rose to Rp817 billion from Rp647 billion in the previous year.
Revenue: The Group's consolidated revenue (after elimination of inter-segment sales) in 2H2024 increased 6% mainly due to higher EOF Division sales. On a full year basis, revenue came in close to last year. The Plantation Division sold 94% of its CPO to EOF Division in FY2024 compared to 75% in FY2023.
Cost of sales: Lower cost of sales in 2H2024 and FY2024 was mainly due to higher internal CPO sold to refineries and lower nucleus palm production costs, and partly offset by higher purchase costs of raw materials (i.e. CPO) by the EOF Division.
Gross profit: The Group's gross profit increased by 56% in 2H2024 and 45% in FY2024 mainly due to higher profit contribution from the Plantation Division from higher selling prices of palm products and lower nucleus palm production costs.
Selling and distribution expenses (S&D): S&D expenses declined 11% in 2H2024 mainly due to lower export levy/duty and distribution and advertising and promotion costs. On full year basis, S&D expenses declined 6% mainly due to lower export levy/duty and freight costs.
Foreign Exchange Gain/(Loss): The Group recognised a foreign currency gain of Rp73 billion in FY2024 mainly due to the translation of US dollar-denominated assets (i.e. cash) as of 31 December 2024. The foreign currency gain was mainly due to the weakening of the Indonesia Rupiah against the US Dollar from Rp15,416/US$ last year end to Rp16,162/US$ as of 31 December 2024. In FY2023, the foreign currency loss of Rp2 billion was mainly due to the strengthening of the Indonesia Rupiah against the US Dollar.
Other Operating Income: Lower other operating income in 2H2024 and FY2024 was mainly due to lower compensation income and gain on disposal of property, plant and equipment.
Other Operating Expenses: The significant increase in other operating expenses in 2H2024 and FY2024 was mainly due to higher provision for plasma receivables, higher impairment loss and write-off of property, plant and equipment (refer to Note 5).
Share of Results of Associate Companies: In December 2023, FPNRL fully impaired its underlying investment of sugar operation in the Philippines and the Group had discontinued the recognition of FPNRL's losses beyond the carrying amount since then. As a result, the Group recorded a turnaround from share of loss to profit from its associate companies of Rp12 billion and Rp8 billion in 2H2024 and FY2024.
Share of Results of Joint Ventures (JVs): : Our share of the joint ventures' profit was lower at Rp44 billion despite higher gross profit from raw sugar sales. This was mainly due to higher financial expenses and a one-off lease write-off in a joint venture.
Gain/(Loss) arising from Changes in Fair Values of Biological Assets: : In FY2024, the Group reported a gain from changes in fair value of biological assets of Rp318 billion due to higher FFB prices.
Impairment of Goodwill: Based on the assessment, there was no goodwill impairment to be recognised in FY2024. In FY2023, an impairment loss of Rp6 billion was recorded for a CGU (i.e. PT MLI) as the recoverable amount was lower than the carrying value.
Profit from Operations: 2H2024 and FY2024 profit from operations increased 46% and 66% mainly due to higher gross profit and net gain arising from changes in fair values of biological assets, but partly offset by an increase in other operating expenses.
Financial incomee/(expenses): Higher finance income in 2H2024 and FY2024 was mainly due to higher fixed deposit amount and rates. Whereas finance expenses decreased in 2H2024 and FY2024 mainly due to lower loans.
Income Tax Expenses: The Group recognised higher income tax expenses in 2H2024 and FY2024 mainly attributable to higher corporate income tax in line with higher profit.
Net Profit After Tax (NPAT): The Group reported 75% and 125% increase in NPAT in 2H2024 and FY2024 mainly due to higher profit from operations. This was partly offset by higher income tax expenses.
Attributable Profit to the Owners of the Company: The Group's 2H2024 and FY2024 attributable profit to owners of the Company rose 56% and 82% over the same period last year.
Review of Financial PositionAs at 31 December 2024, the Group reported total non-current assets of Rp25.7 trillion, compared to Rp27.2 trillion as at 31 December 2023. The decrease was mainly due to depreciation, impairment loss and write-off of property, plant and equipment; lower plasma receivables; and a reduced carrying value of investments in joint ventures. This was partly offset by higher advances for fixed asset purchases.
The Group's total current assets stood at Rp13.4 trillion as at 31 December 2024, up from Rp9.9 trillion as at 31 December 2023. The increase was driven by higher CPO inventories in the Plantation and EOF divisions, along with increases in trade and other receivables, advances for raw material purchases, prepaid taxes, biological assets and cash levels.
As at 31 December 2024, the Group's total liabilities remained similar to last year's Rp13.3 trillion. During the year, certain interest-bearing loans and borrowings were reclassified from current liabilities to non-current liabilities following the rollover of these facilities from short-term to long-term borrowings.
The Group recorded net current assets of Rp4.5 trillion as at 31 December 2024, compared to Rp0.4 trillion in the previous year-end. The Group's financial position improved due to higher cash levels and the rollover of certain matured bank facilities to long-term basis. Consequently, the Group's net debt-toequity ratio decreased from 0.11 times in the prior year to 0.07 times as at 31 December 2024.
Review of Cash FlowsDespite improved operating results, the Group reported lower net operating cash flows of Rp2.2 trillion in 2024, compared to Rp3.8 trillion in 2023. This was because of higher working capital arising from increased inventories, trade and other receivables, and advances to suppliers.
The Group recorded Rp1.4 trillion of investing activities in 2024, a 15% increase over previous year mainly due to higher advances for projects and fixed assets. This was partly offset by lower plasma receivables.
In terms of financing activities, the Group recorded net cash usage of Rp0.1 trillion in 2024, compared to Rp1.7 trillion in 2023. This was mainly due to capital contributions in subsidiaries by a non-controlling shareholder and lower net repayment of loans during the year.
As of 31 December 2024, the Group's cash levels increased to Rp5.9 trillion from Rp5.2 trillion a year ago, driven by positive operating free cash flows.
Commodity prices are expected to remain highly volatile, driven by uncertainties surrounding weather conditions and geopolitical conflicts. Global demand growth is likely to remain subdued due to weaker economic performance and challenging macroeconomic factors.
Despite the outlook, the Plantation Division will continue to focus on targeted action plans, including improving operational results, strengthening cost controls, driving innovations that elevate plantation productivity, and prioritising capital investments in critical areas.
To meet rising demands driven by Indonesia's population and per capita income growth, we are expanding our Tanjong Priok refinery by adding a third production line, capable of processing up to 450,000 tonnes of CPO per year. Upon completion in the second half of 2025, the expansion will increase the total CPO refining capacity from 1.7 million tonnes to 2.2 million tonnes annually. With higher refining capacity, the EOF Division will focus on expanding sales volumes through competitive pricing strategies and enhanced distribution, ensuring ample availability to meet Indonesia's population and per capita income growth.
