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Halcyon Agri Q3 revenue at $513.1 million

Halcyon Agri Q3 revenue at $513.1 million

Halcyon Agri Corporation has generated revenue of $513.1 million in the third quarter ended September 30, 2019. The operating losses were $5.6 million and the cash flow generated was $31.8 million in the same period. The confluence of weakened demand, tight supply and persistent low prices resulting in lower sales volumes and compressed operating margins, the company said.

The sales volumes contracted 11 percent from 374,380 tonnes in Q3 2018 to 333,682 tonnes in Q3 2019. With average market prices similar in the two periods, active sales management limited the decline in revenues to 7.2 percent.

The tightening supply is expected to exceed any reduction in demand which will inevitably lead to an upward normalisation of natural rubber prices. With selling prices yet to adjust, however, operating margins are significantly compressed and combined with lower volumes, resulted in gross profit of $26.9 million in Q3 2019 compared to $32.5 million in Q3 2018.

“Future Rubber has long been our vision, and we’ve put our words into practice over the last two years. We have looked at every part of our group and asked how we could operate to bring greater sustainability to our supply chain. Whether that’s how our plantations operate, how we disrupt the way the industry trades or how we work with the upstream, we’ve left no stone unturned in building the group to be as sustainable as possible” said Mr Robert Meyer, Chief Executive Officer, Halcyon Agri.

The market conditions currently being experienced are exceptionally challenging for the natural rubber industry as a whole. With its scale and global diversification, Halcyon Agri is well-positioned to weather the storm and emerge profitably as the price cycle turns. Solid execution and cost management ensured that Halcyon Agri remained operating cash flow positive for Q3 2019 and for 9M 2019 overall, the company said.

Halcyon Agri is consolidating its global tyre-maker processing and supply platform, under the umbrella of Halcyon Rubber Company (HRC). Halcyon has seen strong trading on HeveaConnect, its disruptive digital marketplace for HeveaPRO-certified rubber, which launched in April 2019. HeveaConnect aims to promote greater price transparency in the natural rubber market and to move away from reference-based price-fixing which remains opaque and unrepresentative of sustainable pricing requirements. The platform has traded in excess of 28,000 tonnes of rubber, translating to $38 million worth of product.

 

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