Kencana Agri Limited 1H 2025 Financial Results: Strong Rebound Drives Profitability
Kencana Agri Limited, a palm oil producer with operations across Sumatra, Kalimantan, and Sulawesi, has delivered an impressive set of results for the first half of 2025. The company operates seven palm oil mills and two kernel crushing plants, with a total processing capacity of 335 MT/hour and 435 MT/day respectively. Below, we break down the key financial metrics, highlight operational trends, and provide actionable insights for investors.
Key Financial Metrics
| Metric |
1H 2025 |
1H 2024 |
YoY Change |
| Revenue (US\$’000) |
87,148 |
54,531 |
+59.8% |
| Gross Profit (US\$’000) |
28,211 |
14,317 |
+97.0% |
| Operating Profit (US\$’000) |
19,836 |
11,148 |
+77.9% |
| Profit Before Tax (US\$’000) |
13,132 |
2,213 |
+493.4% |
| Profit After Tax (US\$’000) |
9,782 |
568 |
+1623.1% |
| EBITDA (US\$’000) |
29,941 |
14,644 |
+104.5% |
| Gross Margin (%) |
32.4 |
26.3 |
+6.1pp |
| Net Profit Margin (%) |
11.2 |
1.0 |
+10.2pp |
| EBITDA Margin (%) |
34.4 |
26.9 |
+7.5pp |
Operational Performance Highlights
- Fresh Fruit Bunch (FFB) Production: Increased by 29.3% YoY to 394,131 MT in 1H 2025.
- FFB Processed: Up 39.0% YoY to 448,088 MT, with significant growth in external party sourcing (+173.8%).
- Crude Palm Oil (CPO) Production: Rose by 32.4% YoY to 93,981 MT.
- FFB Yield (Nucleus): Improved to 6.8 MT/ha, up 33.3% YoY.
- Oil Extraction Rate: Slightly decreased to 21.0% (from 22.0%).
- Sales Revenue (CPO): Jumped 48.7% YoY; average selling price increased 30.1%.
Historical Performance Trend
The company’s FFB production has shown a volatile trend in recent years, peaking in 2023 and dipping in 2024, with a rebound in 1H 2025. The nucleus FFB production for 1H 2025 is 322,466 MT, compared to full-year figures between 547,461 MT and 623,068 MT from 2021 to 2024. This suggests a strong recovery trajectory in 2025.
Balance Sheet and Cash Flow
- Total Assets: \$290.3 million as of June 30, 2025 (up 0.7% from December 2024).
- Shareholders’ Equity: \$50.6 million (up 23.7%).
- Net Debt/Equity: Improved to 3.0x (from 4.1x), reflecting deleveraging and stronger balance sheet health.
- Net cash from operations: \$24.6 million, up nearly 500% YoY.
- Cash at end of period: \$14.9 million (up 238.2% YoY).
Cash Flow Table
| Metric |
1H 2025 |
1H 2024 |
YoY Change |
| Net Cash from Operating (US\$’000) |
24,565 |
4,096 |
+499.7% |
| Net Cash used in Investing (US\$’000) |
(5,370) |
(6,726) |
-20.2% |
| Net Cash (used in)/from Financing (US\$’000) |
(13,702) |
3,787 |
n/m |
| Cash at End of Period (US\$’000) |
14,910 |
4,408 |
+238.2% |
Notable Observations and One-offs
- Sustained Margin Expansion: Significant improvements in gross, net, and EBITDA margins reflect operating leverage and cost optimization.
- No Dividend Information: The report does not mention any interim or final dividend proposals.
- No Major Corporate Actions: There is no mention of asset revaluation, divestments, fundraising, or share buybacks in this period.
- No Disclosure of Directors’ Pay or Exceptional Items: The report does not include details on directors’ remuneration or any exceptional earnings/expenses.
- No Statement from the Chairman: There is no Chairman’s Statement included in the report.
- Improved Leverage and Coverage: Net Debt/EBITDA reduced to 2.6x from 3.5x, and EBITDA/Interest Expense improved to 4.3x, indicating stronger debt servicing ability.
- No Reported Extraordinary Events: There is no disclosure regarding legal disputes, policy changes, or macroeconomic disruptions for the period.
Conclusion and Investment Recommendation
Overall Financial Performance: Kencana Agri Limited has delivered a strong set of results in 1H 2025, marked by robust revenue and profit growth, expanding margins, improved cash flow generation, and enhanced balance sheet strength. The company’s operational recovery and cost discipline are evident, but the absence of dividend information or new strategic initiatives limits additional upside catalysts for now.
For Existing Shareholders: The company’s momentum and improving financials suggest it is prudent to continue holding the stock. The strong rebound in profitability, cash generation, and deleveraging all point to upside potential, provided operational execution continues and palm oil prices remain supportive.
For Potential Investors: Prospective investors may consider initiating a position given the clear signs of turnaround, but should be mindful of sector volatility and the lack of immediate dividend yield. Monitoring future updates for dividend policy or new growth drivers is recommended.
Disclaimer: This analysis is based solely on information presented in the company’s 1H 2025 performance review. It does not constitute investment advice. Investors should conduct their own due diligence and consider their risk tolerance before making investment decisions.
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