Company Overview

• Bumitama Agri is a leading producer of crude palm oil (CPO) and palm kernel (PK) in Indonesia, focusing on the cultivation of oil palm, harvesting fresh fruit bunches (FFB), and processing them into CPO and PK.

• In 2023, Bumitama produced 1.22 million MT of CPO and 253,114 MT of PK and achieved an oil extraction rate (OER) of 22.7%, which is a key performance indicator in the palm oil industry.
   
• It Sells Its CPO and PK to Refineries Across Indonesia.

Headquarters and Facilities:

• The main corporate office is in Singapore, while majority of operational facilities are in Indonesia. These include:

• Central Kalimantan: 104,000 hectares of planted oil palm and 9 mills with a processing capacity of 675 tons per hour (tph).

• West Kalimantan: 80,000 hectares of planted oil palm and 7 mills with a processing capacity of 400 tph.
   
• Riau: 2,000 Hectares of Planted Oil Palm and 1 Mill With a Processing Capacity of 90 Tph.
   
• These facilities are strategically located in areas with favorable precipitation and temperature, which are well-suited for oil palm cultivation. This setup helps Bumitama maintain high productivity and cost efficiency in their operations.

9MFY24 Financial Performance

• CPO Production and Sales: CPO production volume was 791,000 tons, down from 901,000 tons in the same period last year. The CPO ASP increased to IDR 12,200 per kg, up from IDR 11,400 per kg in 9MFY23.

• Revenue: Reported IDR 11.58 trillion revenue for 9MFY24, slightly down from IDR 11.80 trillion in 9MFY23.

• Gross Margin: For 9MFY24, Bumitama Reported a Gross Margin of 24.2%, Compared to 32.0% in 9MFY23.

• Net Profit: The net profit attributable to owners of the company was IDR 1.45 trillion, a decrease of 29% compared to IDR 2.06 trillion in 9MFY23.

Product Revenue:

CPO Accounting for 91.3% and PK for 8.7% of Total Revenue in FY23.

Processing FFB Into CPO and PK While Maintaining Product Quality, Through the Following Steps:

• Harvesting: FFB Are Harvested From the Plantations.

• Transportation: FFB Are Transported to Nearby Mills.

• Sterilisation: FFB Are Steamed to Deactivate Enzymes and Facilitate Fruit Stripping.

• Threshing: Fruits Are Separated From the Bunches.

• Pressing: Fruits Are Pressed to Extract Oil.

• Clarification: Extracted Oil Is Separated From Impurities.

• Purification: Crude Oil Is Further Purified.

• Kernel Recovery: Nuts Are Cracked to Extract Palm Kernels.

• Storage and Dispatch: CPO and PK Are Stored and Dispatched to Customers.

Production Capabilities:

• Plantation Area: Bumitama manages a total planted area of 187,116 hectares across Central Kalimantan, West Kalimantan, and Riau in Indonesia. This includes both nucleus and plasma plantations.

• Mills: The company operates 15 palm oil mills with a total annual Fresh Fruit Bunch (FFB) processing capacity of 6.39 million metric tonnes (MT) as of FY23. The mills are strategically located close to the plantation estates to ensure efficient processing and reduce transportation costs.

Market Position and Achievements:

• Despite price volatility in the market, Bumitama’s financial management has ensured robust performance. The company's EBITDA and net profit margins were 30.0% and 15.9% respectively, outperforming industry averages. Over the past five years, revenue has doubled, and net profit has grown at a compound annual growth rate (CAGR) of 37.4%.

• Bumitama has managed to maintain high utilisation of its mills by increasing the intake of external FFB, helping the company sustain production levels and market presence.

• Improving industry prospects in the past 5 years have resulted in robust financial performance and paved the way for significant deleveraging.

• The Group continually enhances its operations to meet ISPO and RSPO standards, regularly evaluates policies, introduces innovative efficiency methods like mobile risk reporting, and uses drones for reforestation.

• Bumitama has received several accolades for its financial performance and sustainability efforts, including the RSPO Excellence Award for Conservation Leadership and recognition in Asiamoney’s Asia Outstanding Companies Poll.

• Recognised with 3 esteemed awards in the Food & Beverages + Food & Drug Retailing category from The Edge Singapore Billion Dollar Club 2024, highlighting its remarkable performance over the past three years.

R&D and Technological Advancements:

• Efficiency and Productivity: Bumitama uses high-quality seeds and fertilizers to boost Fresh Fruit Bunch (FFB) yield and extraction rates, while recycling nutrients from organic fertilizers.

• Sustainable Practices: They employ legume cover crops to conserve soil and beneficial plants for pest control, using barn owls to replace rodenticides on 94.6% of planted areas.

Strategic Positioning and Future Outlook:

• Recent industry sentiments have been buoyant, fueled by a surge in palm oil futures that surpassed the significant MYR4,500 per ton mark in late October. The last occurrence of such high levels was in mid-2022, driven by a tighter supply of vegetable oils due to the Black Sea region conflict and policy changes from leading palm oil producers. This situation mirrors 2022, with the tight supply narrative resurfacing due to similar factors: anticipated declines in palm oil inventories as production remains lower than expected in Indonesia for the first 9 months, coupled with policy changes in the top 2 producing countries.

• Bumitama is committed to bolstering internal FFB production, enhancing efficiency through more extensive mechanisation and maintaining precision agronomy, to be ready to tackle economic and environmental challenges ahead.

Key Risks:

OCBC noted in Nov 2024 that the company's revenue and profitability are highly dependent on the price of crude palm oil (CPO). Any significant decline in CPO prices can adversely its financial performance. Execution challenges can also lead to cost overruns and delays, stringent domestic and international regulations can affect operations and financial performance, and extreme weather conditions may impacting the yield and quality of oil palm fruits. These can also serve as upside risks.