Singapore-listed palm oil company Golden Agri-Resources said on Friday that its second-quarter operating performance had been hit by reduced output due to the El Nino weather pattern.
The world's second largest palm plantation company's earnings before interest, taxes, depreciation and amortization fell 41 percent in the second quarter from a year before to USD 86 million. Palm product output in the second quarter fell 37 percent to 455,000 tonnes.
But the company's net profit for the second quarter rose to USD 40 million, compared with USD 10 million a year ago, thanks to deferred tax income. The latest results included net tax-related benefits of USD 104 million from a revaluation of its plantation assets in Indonesia.
The world's second largest palm oil plantation company expects to see tax benefits in the same range in the second half.
While production is expected to improve in the second half of the year versus the first, the company will see its 2016 palm oil output falling 15-20 percent versus the previous year, Richard Fung, director of investor relations, said on a conference call.
He expects crude palm oil prices to stay range bound for the rest of the year.
"We expect better results due to larger harvest volumes in the second half of the year," Franky Widjaja, the company's chairman and chief executive officer, said in a statement.
The strongest El Nino in nearly 20 years, which damaged crop production in Asia and caused food shortages, ended earlier this year, according to the Australian Bureau of Meteorology (BOM).
"Positive developments include restocking activities in large consuming countries, potential La Niña conditions, and further implementation of Indonesia's biodiesel mandate," Widjaja said.
The company's stock was down 2.7 percent in morning trade, while the broader market was 0.3 percent lower.
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