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November 15, 2019 01:17 PM

Natural rubber demand, pricing hits Halcyon Agri in 2019 third quarter

Rubber & Plastics News Staff
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    SINGAPORE—Natural rubber giant Halcyon Agri Corp. Ltd. had sales of $513.1 million in the third quarter of 2019, down 7.2% from the $552.9 million it reported in the third quarter of 2018, the company reported.

    Halcyon Agri had a gross profit of $26.9 million during the quarter ended Sept. 30, 2019, but a net loss of $16.6 million, according to a press release issued Nov. 14.

    This compares with gross profit of $32.5 million and net profit of $800,000 in the third quarter of 2018, the company said.

    "The third quarter presented highly demanding market conditions for Halcyon Agri, with the confluence of weakened demand, tight supply and persistent low prices resulting in depressed sales volumes and compressed operating margins," Halcyon Agri said.

    While Halcyon Agri is optimistic about long-term demand for NR, near-term concerns about global growth contributed to a weak market during the quarter, the company said. Sales volumes contracted 11% to 334,000 metric tons from 374,000 tons in the same quarter last year, it said.

    Years of depressed prices have caused smallholders to under-maintain and even abandon their Hevea trees, according to Halcyon Agri. Also, leaf and root diseases have appeared in Thailand, Indonesia and Malaysia, reducing rubber yields by at least half, the company said.

    "The tightening supply is expected to exceed any reduction in demand, which will inevitably lead to an upward normalization of natural rubber prices," it said.

    Halcyon Agri is leveraging opportunities created by the demise of some dealers and mid-sized processors, according to the release. The company is consolidating its global tire maker processing and supply platform under the umbrella of Halcyon Rubber Co., it said.

    The company has seen strong trading on HeveaConnect, its digital marketplace for HeveaPRO-certified rubber which it launched in April 2019, it said.

    Also, its Corrie MacColl business unit is making significant strides in implementing its sustainability agenda in Cameroon through its Cameroon Outgrower program, Halcyon Agri said.

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