PT Mahkota Group Tbk (MGRO) recorded a declining revenue during the third quarter of 2019. Based on the third quarter financial report, MGRO's revenue decreased 6.8% year on year (yoy) to Rp 1.36 trillion from the previous Rp 1.46 trillion.
Declining revenue was followed by net profit attributable to owners of the parent company which also shrank considerably in the amount of 46.83% yoy, from the previous Rp 45.41 billion to Rp 24.14 billion.
In its September 2019 financial report, the issuer coded in MGRO shares 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 biggest source of income from the Mahkota Group comes from crude palm oil, palm kernel and tank services. In addition, MGRO also has a source of income from shells, and management services.
Meanwhile, the total assets recorded in September 2019 amounted to Rp1.31 trillion, up by 22.42% when compared to the same period the previous year. The assets consisted of liabilities of Rp645.3 billion and equity of Rp674.4 billion.
Meanwhile, the decline in the performance of plantation companies is caused by the unstable price of crude palm oil (CPO). The price of palm oil has continued to decline below RM 2,000 per ton. In fact, CPO prices had reached record lows.
Quoting Bloomberg, CPO price for August 2019 delivery contract on the Malaysia Derivative Exchange is at the level of RM 1,963 per metric ton. This price weakened 0.15% from the previous day by RM 1,966 per metric ton. In year to date (ytd), CPO prices have dropped 10.5%. The highest increase in CPO prices occurred in August at the level of RM 2,259 per metric per 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), which globally tended to drop dramatically throughout 2019. "That is also beyond the company's control," she said when contacted by Kontan. co.id, Saturday (2/11).
Even though it recorded a decline, MGRO production operations are claimed to have increased. Elvi further said, the company made various efforts to increase company profits.
MGRO hopes that business next year will be better than in 2019. The company is optimistic that the downstream or refinery will begin to run 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. For kernel crushing plant products will produce 400 tons of palm kernel oil per day.
MGRO's optimism was driven by other factors, such as the government's biodiesel program, and the addition of the Palm Oil Mill (PKS) in South Sumatra. "That will all have an impact on improving our performance next year," he said again.
So far, the company has not yet determined the size of its capital expenditure (capex) allocation in 2019. This figure is still under management's calculation because there will be several business plans to be developed later.
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