PT Sinar Mas Agro Resources and Technology Tbk : First Quarter 2022 SMARTnews

Smartnews - March 2022

•  SMART achieves a record first quarter performance in 2022 with a 60% year-on-year increase in EBITDA to Rp 1.73 trillion and robust net profit of Rp 912 billion

•  Continued strength in CPO market prices more than compensated for lower palm product output

PLANTATION STATISTICS

As of 31 March 2022, the Company's palm plantation area stood at approximately 137,300 hectares, comprising 132,300 hectares of mature estates and 5,000 hectares of immature estates. Nucleus and plasma estates amounted to 106,000 and 31,300 hectares, respectively.

Description

1Q 2022

1Q 2021

Change

FFB produced - MT

490,933

670,070 -27%

CPO produced - MT PK produced - MT

114,866

151,950 -24%

31,528

40,227 -22%

Oil extraction rate - % Kernel extraction rate - %

21.0

21.2 -0.2%

5.8

5.6 0.2%During first quarter 2022, SMART's fruit production decreased by 27% to 491 thousand tonnes, from first quarter 2021's high base of production that experienced a rebound after the El Niño condition. The production was also impacted by high rainfalls and old estates being prepared for replanting.

Accordingly, CPO and PK production declined to 115 thousand and 32 thousand tonnes, respectively. Oil and kernel extraction rates stood at 21% and 5.8%, respectively.

FINANCIAL PERFORMANCE

In billion Rupiah

1Q 2022

1Q 2021

Change

Net sales

17,380

11,100 57%

Cost of goods sold Gross profit

14,237

9,001 58%

3,143

2,099 50%

Income from operations EBITDA

1,267

567 124%

1,728

1,083 60%

Net profit attributable to owners of the parent company

911

250 264%First quarter 2022's net sales reached Rp 17.4 trillion, an expansion by 57% with increases in both average selling prices and sales volume. CPO market prices (FOB Belawan) increased by 49% year-on-year, averaging US$ 1,579 per MT. After deducting export tax and levy, the average net CPO market price was US$ 1,158 per MT, or 60% higher than in the first quarter of 2021.

Most of our revenue came from refined branded and unbranded products (including biodiesel and oleochemicals) accounting for 85% of total sales. CPO and other non-refined product sales represented the remaining 15%. This is in line with our strategy to focus our sales on higher value-added products.

Cost of goods sold for the three-month period ended 31 March 2022 increased by 58% to Rp 14.24 trillion from Rp 9.00 trillion in the previous year's quarter as raw materials cost increased in line with expanded sales.

During the current quarter, income from operations more than double to Rp 1.27 trillion resulting from higher gross profit, partly offset by higher operating expenses. The increase in selling expenses was mostly attributable to higher export tax and levy charges due to the strengthening of CPO market prices, while the increase in general and administrative expenses was mainly due to higher salaries, wages and employees' benefits.

Corresponding to the increase in income from operations, the Company's EBITDA grew by 60% year-on-year to Rp 1.73 trillion.

SMART recorded significantly higher net profit attributable to owners of the parent company of Rp 911 billion during the first quarter 2022, more than triple compared to the same quarter last year. The net profit translates into earnings per share of Rp 317.

FINANCIAL POSITION

In billion Rupiah

31-Mar-22

31-Dec-21

Change

Assets

Liabilities

Equity attributable to owners of the parent company

42,614 27,277 15,325

40,345 5.6%

25,927 5.2%

14,407 6.4%As of 31 March 2022, the Company's total assets increased by 5.6% to Rp 42.61 trillion from Rp 40.35 trillion at the end of 2021. The increase was mainly attributable to higher inventory, trade receivables and advance purchases, which was partly offset by lower cash and cash equivalents.

Total liabilities as per end of March 2022 stood at Rp 27.28 trillion, an increase of 5.2% compared to end 2021. The increase primarily came from the issuance of bonds on the Indonesia Stock Exchange during the quarter and higher short-term bank loans in line with the increase in working capital needs. As of 31 March 2022, bank loans (including bonds payable) totaled Rp 21.27 trillion with a strengthened net gearing1 of 0.20x.

1 Total borrowings less cash and cash equivalents less liquid working capital divided by total equity

Total equity attributable to owners of parent company increased to Rp 15.33 trillion as of 31 March 2022, from Rp 14.41 trillion at the end of 2021. The Company's retained earnings expanded to Rp 12.69 trillion compared to Rp 11.78 trillion as at end 2021 resulting from the current quarter's income.

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