25 June 2019

Bisnis, MEDAN — PT Mahkota Group Tbk. or MGRO's crude palm oil (CPO) production during the first semester of 2019 is projected to touch 101,654 tons.

Corporate Secretary of Mahkota Group, Elvi said the estimate was made based on the realization of CPO production until May 2019, which amounted to 77,502 tons.

According to him, in general the domestic palm oil industry is expected to have to boost production because China needs a substitute for soybean oil supplies from the United States.

This, he said, occurred due to the impact of the China-United States trade war. He assessed that revenues have the opportunity to be boosted even though they are currently not working on the international market. The reason is that the availability of domestic supplies can be shifted by exporters' desire to meet the needs in China.

“CPO production until May 2019 was 77,502 tons. The estimated CPO production for the first semester of 2019 is around 101,654 tons,” he said when contacted by Bisnis, Monday (24/6).

Meanwhile, currently the company is still completing the cooking oil factory whose progress has touched 70% and it is estimated that the factory can operate in August 2019. The company plans to go downstream so that it can create added value from the CPO products produced.

In the downstream sector, the company is building a cooking oil factory with a capacity of 1,500 tons/day in Bengkalis Regency, Riau.

In 2019, the company plans to realize capital expenditure of IDR 200 billion for the construction of processing facilities.

In terms of performance, the company targets a profit of IDR 123 billion and sales of IDR 5 trillion, an increase of 2.5 times from the 2018 target.

This target is expected to be achieved through the palm oil turnaround process which will contribute around 40% of the total sales target.

In the first quarter of 2019, MGRO earned IDR 444.3 billion in revenue, up 8.1% compared to the same period last year of IDR 411 billion.

This year, MGRO will also boost its production with a CPO production target of 203,308 tons, up 4.9% from the 2018 target of 193,715 tons.

According to him, although the company has a vision to build a downstream industry, stimulus from the government is still needed.

Fiscal incentives and ease of development of the downstream industry are expected to encourage the downstreaming of palm oil products. “To encourage palm oil companies to enter downstream products, it is very important to have scalable incentives,” he said.

Source : Bisnis Indonesia (Duwi Setiya Ariyanti)