AS OF SEPTEMBER, MAHKOTA GROUP (MGRO) CPO PRODUCTION HAS REACHED 75% OF THE TARGET
21 October 2020
PT Mahkota Group Tbk (MGRO) continues to hoist its business performance throughout this year. One of them is by boosting crude palm oil (CPO) production significantly compared to last year.
Elvi, Corporate Secretary of MGRO said the company is currently pursuing a CPO production target of 230,000 tons by the end of this year. When compared to last year's production which reached 213,000 tons, there is an increase of around 8% this year.
This increase in production, said Elvi, is intended to meet local market demand and some of the CPO is also used as raw material for the production of Refined, Bleached and Deodorized Palm Oil (RBDPO), refined palm oil. “The prospect of demand in the local market is still running normally, where in terms of CPO prices since June 2020 tends to increase,” he told Kontan.co.id, Wednesday (21/10).
Unfortunately, the management was reluctant to explain in more detail about the price it obtained at this time, which is clear, said Elvi, the company hopes that this trend can last until the end of this year. As of the end of September, the company's CPO production has reached 173,749 thousand tons or 75% of the target.
In addition to focusing on achieving production targets, Elvi said the company also hopes that the refinery product line, aka RBDPO. “In order to develop well and smoothly so that it can contribute a large profit,” she explained.
Elvi further said that the market potential for RBDPO is very large, because the palm oil derivative product is needed as a basic raw material in the manufacture of final products such as margarine, cooking oil, and other basic necessities.
For this reason, the company targets RBDPO production this year to reach 110,000 tons. The CPO derivative product only began to be produced in the middle of this year after the establishment of the company's new refinery plant in Riau which began construction at the end of 2018 and operated in the first semester of this year.
The company is still calculating the production volume of the palm oil derivative, but as of July 2020, the total production volume of RBDPO has reached 6,143 tons. Of the total production, 60% was sold to the export market and 40% locally.
Local buyers of MGRO's RBDPO consist of oleochemical companies that use RBDPO as raw material to be processed into final products such as margarine, cooking oil, and others. Meanwhile, the majority of MGRO's RBDPO buyers in the export market are trading companies or traders.
Elvi has not been able to provide details about revenue projections until the end of the year, but management admits that the market is still full of challenges. For this reason, the company is also quite cautious in seeing business opportunities next year.
In the midst of the current pandemic situation and trade wars that have an impact on the global economy, Elvi said, it is quite difficult to predict the condition of this business in 2021. “However, the company believes that the need for palm oil in human life will remain a major factor in the development of this business in the future,” she said.
Reviewing the company's financial statements until June 2020, MGRO's net income jumped 57.28% on an annual basis to IDR 1.28 trillion. It's just that the company's cost of goods sold was 65.7% higher than the first semester of last year to IDR 1.23 trillion in the same period this year.
So that the company's gross profit was recorded at only IDR 55.17 billion, or a 26.02% drop on an annual basis, which in the first half of last year was recorded at IDR 74.58 billion. Not to mention that selling and administrative expenses swelled, as a result the company earned a net loss of IDR 33.32 billion in the first semester of this year, deeper than the net loss in the first semester of 2019 which amounted to IDR 3.07 billion.