MAHKOTA GROUP (MGRO) RECORDED A DECLINE IN REVENUE DURING THE THIRD QUARTER OF 2019

06 November 2019

PT Mahkota Group Tbk (MGRO) recorded declining revenue during the third quarter of 2019. Based on the third quarter financial report, MGRO's revenue fell 6.8% year on year (yoy) to IDR 1.36 trillion from IDR 1.46 trillion previously.

The declining revenue was followed by net profit attributable to owners of the parent entity which also shrank quite deeply by 46.83% yoy, from IDR 45.41 billion to IDR 24.14 billion.

In the financial report as of September 2019, the issuer coded MGRO stock posted a profit of 29.69 billion. These results decreased by 41.47% when compared to the same period in the previous year which reached 50.73 billion.

The Mahkota Group's largest source of income comes from crude palm oil, palm kernel and tank services. In addition, MGRO also has sources of income from shells, and management services.

Meanwhile, total assets booked in September 2019 amounted to IDR 1.31 trillion, an increase of 22.42% when compared to the same period the previous year. The assets consisted of liabilities of IDR 645.3 billion and equity of IDR 674.4 billion.

Meanwhile, the declining performance of the plantation issuer was due to the unstable crude palm oil (CPO) price. Palm oil prices had continued to decline below RM 2,000 per ton. In fact, CPO prices had reached a record low.

Quoting Bloomberg, CPO prices for August 2019 delivery contracts on the Malaysia Derivative Exchange were at RM 1,963 per metric ton. This price weakened 0.15% from the previous day at RM 1,966 per metric ton. On a year to date (ytd) basis, CPO prices have fallen 10.5%. The highest increase in CPO prices occurred in August at RM 2,259 per metric ton on August 30, 2019.

MGRO Corporate Secretary Elvi said, the decline in the bottom line was due to the price of Crude Palm Oil (CPO) and Palm Kernel (PK) or palm kernel which globally tended to fall dramatically throughout 2019. “That is also beyond the company's control,” he said when contacted by Kontan.co.id, Saturday (2/11).

Despite recording a decline, MGRO's production operations are claimed to have increased. Elvi further said, the company made various efforts to increase company profits.

MGRO hopes that next year's business will be better than 2019. The company is optimistic because the downstream or refinery line will start running fully. Based on data compiled by Kontan.co.id, so far the factory process has reached 85%.

Later, the factory will produce cooking oil products with a production capacity of 1,500 tons per day. The kernel crushing plant will produce 400 tons of palm kernel oil per day.

MGRO's optimism is driven by other factors, such as the government's biodiesel program, and the addition of Palm Oil Mills (PKS) in South Sumatra. “It will all have an impact on improving our performance next year,” he said again.

So far, the company has not determined the amount of capital expenditure (capex) allocation in 2019. This figure is still being calculated by management because there will be several business plans that will be developed later.

Source :