Palm oil industry faces major challenges
"In order to reduce losses as a result of the natural disaster, the company will continue to increase efficiency as well as utility in its efforts, so that the financial indicators show positive progress and development," said President Director of PT Sawit Sumbermas Sarana (SSMS) Rimbun Situmorang to the press in Jakarta on Tuesday. According to him, the difficulties faced by the palm oil industry due to the impact of El Nino and the decline in CPO prices in the global market were not just experienced by the corporation but also by all similar industries nationally. Although it will face major challenges, he said, signs of improvement such as the increasing price of crude palm oil (CPO) are beginning to show a positive trend. Although the price of CPO is currently improving in the last few months, he added, the decline in commodity prices will still affect the corporation's performance in 2016, especially since El Nino, which has been occurring since 2015, is still ongoing and is predicted to continue to have an impact until the end of 2017. "Last year, El Nino caused the production of palm oil by the corporation to decline by 16 percent, and we predict that until the end of 2016, the corporation's CPO production will be corrected between 15 and 20 percent," he said. Rimbun predicts that palm oil production will improve again in 2017 or 2018. While the price of CPO in the global market in April-May averaged between 600 and 630 US dollars per metric ton. Although facing difficulties, he said, the corporation could still distribute cash dividends to shareholders of Rp168.27 billion or 30 percent of the net income of the corporation's fiscal year 2015. He stated that the corporation is still able to distribute shares in the midst of the downturn in the palm oil industry due to the increase in the performance of the corporation whose shares were recorded in the capital market since December of 2013 being significantly noticeable. The area of the corporation's acreage currently reaches 69,841 hectares, up 105 percent compared to 2014, while until the end of 2015, the number of fresh fruit bunches (FFB) processed in factories owned by the corporation reached 1.35 million tons which produced 321,238 tons of CPO. The average age of the corporation's palm oil plants reaches seven years and the majority of plants will enter a peak year of production in the next three to five years. The corporation's management this year has allocated Rp450 billion in capital expenditure (capex), and in the first three months, the funds taken from cash were absorbed 20 percent, which was used for fertilization and planting palm oil trees.
Editor: Ruslan Burhani