RUBBER supplier Halcyon Agri Corporation on Monday posted a core operating loss of US$2.6 million for the first quarter ended March 31, 2020, reversing from a core operating profit of US$5.6 million a year ago.
This comes as gross profit fell 8.5 per cent to US$29 million from US$31.7 million last year, reflecting a reduction in unit gross margin from US$114 per tonne to US$103 per tonne, the company said.
The lower earnings is largely due to the group having positioned for reduced natural rubber production during the Q1 wintering season in Thailand, Malaysia and Indochina, and having been "sideswiped by the coronavirus induced collapse in rubber prices from US$1,450 in the beginning of the year, to US$1,038 as at end March", Halcyon Agri noted.
Consequently, earnings before interest, taxes, depreciation, and amortisation or Ebitda, plunged 69 per cent to US$3.5 million for the quarter from US$11.3 million for the year-ago period.
Meanwhile, revenue rose 3.3 per cent to US$412.8 million from US$399.7 million, driven by a combination of higher sales volumes and moderately higher average selling prices, the company said.
"The Covid-19 crisis and the unprecedented global disruption to industrial and manufacturing activity has had a profound impact on the natural rubber business. We view this pandemic as an acute crisis of unprecedented scale, but also believe that the fundamental demand and supply dynamics of natural rubber remain intact," the company said in its business update on Monday.
In dealing with the pandemic, Halcyon Agri noted that its number one concern is the safety and well-being of its employees. The group has implemented "stringent measures to protect its workers and staff from contracting the disease across its offices, factories and plantations", it said.
According to Halcyon Agri, there have been zero Covid-19 infections among its global workforce of 16,000 employees to date.
Group level guidance on conducting business amid the novel coronavirus situation was issued to all sites, including information on infection prevention measures, procedures for prompt identification and isolation of sick workers, and safe work practices.
A health and safety awareness campaign was also implemented across all its locations, covering main topics such as regular reminders for hand-washing at least once every four hours; regular monitoring of employees' body temperatures; shortened working hours and work-from-home where necessary; as well as ground markers to facilitate social distancing.
In addition, employees and communities are kept abreast of the evolving situation through email updates, daily radio broadcasts in Cameroon, video conferencing sessions with the group chief executive and bulk SMS and WhatsApp updates.
Separately, Halcyon Agri has initiated US$10 million in aggregate operating and capital expenditure reductions for fiscal year 2020 in a bid to address the economic impact of Covid-19. It is also managing its treasury operations to maintain sufficient liquidity headroom across all operating entities, the group said.
Added Robert Meyer, chief executive officer of Halcyon Agri: "We started 2020 positioned for a return to better operating conditions in the automotive industry, and have had to change course in order to deal with a black swan event of significant scale... The next two quarters will be tough, but Halcyon Agri is ready to deal with these challenges. We will protect our people and our business, by balancing our focus on growth, with near-term financial prudence and capital management."
Halcyon Agri's Vietnamese office has reopened last week, and its factories and offices in China, which had earlier ceased operations temporarily to comply with lockdown restrictions, have also resumed full operations.
The group said it is noting a gradual lifting of restrictions in Europe and that its assets in these regions will gradually resume normal operations as well.
Shares in Halcyon Agri closed at S$0.33 on May 8, down S$0.03 or 8.3 per cent. There were no trades for the counter as at 11.23am on Monday.
Source Business Times