Mar 10, 2010

Who is the most profitable CPO firms?

A giant company is always more famed than a smaller firm. But the larger size of a company doesn't always guarantee the higher profit.
It is now happening in the CPO sector. Two largest CPO producers in Indonesia Stock Exchange, PT Astra Agro Lestari Tbk (AALI), subsidiary of PT Astra International Tbk (ASII), and PT PP London Sumatra Indonesia Tbk (LSIP), were suffering a tumble in their operational key indicators last year.
From upper line figures to bottom line, together AALI and LSIP, that is controlled by Salim Group via PT Salim Ivomas Pratama, posted a sharp plunge as a result of the fall in CPO price. The downturn had steeply eroded their margins, sending failure to maintain profitability to their share holders. Most of public investors look the bottom line. A higher bottom line is expected to a higher dividend.
In their 2009 financial reports, Astra Agro booked the largest plunge in net profit compared to three peers LSIP, PT BW Plantation Tbk (BWPT) and PT Gozco Plantations Tbk (GZCO).
As of December 2009, AALI booked a 36.88% fall in net profit from Rp2.63 trillion in 2008 to Rp1.66 trillion. LSIP posted a 23.73% slash in its bottom line from Rp927.56 billion in 2008 to Rp707.49 billion last year as well.
How about sales and operating profit? both companies suffered a decline figures. Astra Agro's sales retreated to Rp7.42 trillion last year from Rp8.16 trillion, while LSIP figure shrank by 17.14% from Rp3.85 trillion to Rp3.19 trillion. Their operating profit also reported a sharp drop of around 22% last year compared a year before.     
In contrast, BW Plantation's bottom line rose 39.78% from Rp119.81 billion in 2008 to Rp167.47 billion last year. 
Gozco was likely to be the most profitable CPO producer last year by posting a 273.31% jump on its net profit from Rp54.75 billion in 2008 to Rp204.39 billion last year. Both companies sales rose 13.71% for BWPT and 40.28% for Gozco.  
But, please take a look their operating margin. The four took the plunge on their operating margin last  year compared 2008 figures. LSIP's margin lowered from 34.2% in 2008 to 31.8% as well as AALI's margin from 41.41% in 2008 to 35.18% last year.
The smaller CPO producers BWPT and GZCO's margin also shrunk from  47.68% and 33.82% in 2008 to 44.31% and 29.79% in 2009. Still, BW Plantation kept the highest operating margin, indicating more profitable on the back of lower operating expense and cost of goods sold.
How about gross margin?
London Sumatra and Astra Agro's margin dropped to 43.57% and 41.78% compared to a year before of 48.31% and 46.57%. Gozco also suffered lower gross margin from 39.95% in 2008 to 36.03% last year. But, BWPT enabled to jack up its gross margin from 58.58% in 2008 to 62.49% which was the highest in the CPO sector.
According to a morning note published by BNP Paribas yesterday, despite lower CPO price, much stronger production led to BWPT's margin improvement in 2009 as cash production cost declined 14% year on year to US$312 per ton. In return, BWPT gross margin soared to 62.49% in 2009 from 59.58% in 2008, still the highest in the sector.

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