Halcyon Agri notes NR supply issues, Q1 decline

Singapore – Natural rubber supplier Halcyon Agri Corp. Ltd has reported supply issues alongside declines in first-quarter sales and earnings – due to lower volumes and higher costs.

During the quarter, weather-related disruption in Indonesia and Thailand led Halcyon Agri to cut output and “focus on margins,” added executive director and CEO Robert Meyer in an 8 May statement.

Challenges for NR growers could persist, said Meyer suggesting that the supply side could “experience more difficulties in the quarters to come…lending a degree of support to prices.”

On the demand side, Halcyon Agri’s boss said China was contracting lower volumes and “seems to be focused on reducing domestic inventory.”

Against this background, Halcyon Agri posted sales of just under $400 million (€358 million) for the three months to end of March, down 16% from the year before.

The company attributed the decline to a 7.5% drop in “revenue per tonne” and 9.2% lower sales volume at 278,000 tonnes during the quarter.

Earnings (EBITDA) fell 8.3% year-on-year to $10.8 million, due in part to the drop in volumes and increased financing costs.

However, said Halcyon Agri, the volumes decline was largely due to the group migrating its sales strategy away from long-term contract (LTC) sales, towards spot sales.

This move is in-line with Halcyon Agri’s stated commitment to shift the majority of its tire-focused sales volumes to a new digital platform, called HeveaConnect, by the end of June.