Kencana Agri, a key player in Indonesia's palm oil sector, experienced notable financial challenges in the first half of 2024. The company's revenue fell by 12% year-on-year, from USD 98.9 million in the same period of 2023 to USD 87.2 million in 2024. This decline reflects weakening palm oil demand and price instability caused by supply chain disruptions exacerbated by the prolonged dry season.
Net profit faced an even steeper drop, plummeting by 70% to just USD 0.6 million compared to USD 1.9 million in 2023. A significant factor behind this was a USD 2.1 million foreign exchange loss linked to dollar-denominated loans. The Indonesian rupiah’s 7% depreciation against the U.S. dollar further strained the company’s financials.
On the asset side, Kencana Agri's current assets grew by USD 6 million, reaching USD 88.5 million by June 30, 2024, mainly due to increased inventories. However, non-current assets declined by USD 14.4 million, attributed to the impact of currency translation losses and depreciation of mature plantations.
Henry Maknawi, Chairman of Kencana Agri, stated that while crude palm oil (CPO) prices remained relatively stable in the first half of the year, global demand was hindered by supply issues. The dry season intensified these challenges, disrupting palm oil production across the region.
Kencana Agri’s struggles highlight broader industry challenges in Indonesia, where global market dynamics and currency fluctuations heavily influence business outcomes. Despite these setbacks, the company continues to focus on operational efficiency and adapting to market changes to navigate current economic conditions.
With the palm oil industry facing heightened scrutiny and evolving market trends, companies like Kencana Agri must adopt innovative strategies to maintain resilience and competitiveness.
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