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Bumitama Agri: Stability Amid Uncertainties in 1H25 · Investor Exchange

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  Time for another Investor Exchange podcast. Here are your hosts, Matt and Sally.
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  Welcome to the Deep Dive. Today, we're cutting through the noise to understand
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  what's really happening inside Bumatama Agri-LTD.
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  They're a major player in the palm oil industry. Right. A really significant one. Exactly.
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  And you've given us their latest financial reports. And our mission today,
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  well, it's pretty clear.
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  Unpack their performance for the first half of 2025. Yep.
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  See what's behind the numbers. Uncover the why, you know, behind those numbers
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  and get a clearer picture of what the future might hold.
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  Not just for them, but for the broader palm oil market, too.
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  It's a key indicator, definitely.
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  So you're going to walk away with a concise, insightful understanding of how
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  this agricultural giant is navigating, well, a pretty tricky world right now.
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  Shifting markets, geopolitical stuff, even unpredictable weather.
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  All the usual suspects. Okay, so let's start with the big picture, the headline numbers.
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  How did Bumatama Agri do in the first half of 25 compared to the same time in 24?
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  The figures from their profit and loss statement, they're quite striking,
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  some really robust growth there.
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  Yeah, they certainly stand out. So revenue first, it surged by over 28%,
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  nearly 9.75 trillion Indonesian rupiah.
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  I mean, that's a massive jump. It really is a huge top line increase.
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  And this impressive top-line growth, it seems like it flowed straight through
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  to their profitability.
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  Gross profit climbed, even more impressively, 43% to over 2.57 trillion IDR.
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  Which suggests strong margins, right, on their core operations.
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  Exactly. And these strong figures didn't just stop there.
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  Profit for the period itself soared by an incredible 50.9% to more than 1.5
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  trillion IDR. Over 50%. Wow. And...
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  Maybe more directly impactful for shareholders, the profit attributable to the
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  company's owners, that jumped 47.8% to 1.27 trillion IDR.
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  Oh, almost matching that overall profit growth. Good sign for owners. Definitely.
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  And then EBITDA, which, you know, is basically that snapshot of operational
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  cash flow before all the deductions like interest, taxes, depreciation.
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  Right. The core operational earnings power. That showed a strong increase, too.
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  42.2% to nearly 2.55 trillion IDR.
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  And finally, very important for shareholders, earnings per share,
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  basic and diluted, grew significantly from 494 IDR to 730 IDR per share. Quite a leap in EPS.
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  Those are really exceptional year-on-year games across the board.
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  They really are. And what's really insightful here, I think,
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  is that their investor, Circular, the release they put out, it was explicitly
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  titled Stability Amid Uncertainties. Ah, interesting framing.
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  Yeah, and these numbers certainly seem to back that up. We're seeing robust
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  performance, not just, you know, averaged over the whole first half,
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  but specifically in the second quarter of 2025, too. Okay, so consistent momentum.
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  Exactly. It demonstrates that. For example, quarterly revenue just in Q2 alone
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  reached 5.15 trillion IDR.
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  That's almost an all-time high for them, very close to the peak they hit back in Q4 of 2024.
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  So not just a blip, but sustained strength. Right. It suggests it's not just a one-off spike.
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  And if we zoom in on the quarterly net profit, that surged 46 percent from about
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  528 billion IDR in Q224 to 770 billion in Q225. Another big jump.
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  Yeah. This quarterly performance really underscores the underlying health and
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  strong operational execution within the company.
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  These shorter term indicators are lining up with the longer term half year results.
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  Sets a positive tone then.
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  It really does. It sets a very positive tone for understanding what's actually driving this success.
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  Yeah. It shows a company managing to thrive even when the, you know,
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  the global economic landscape is anything but smooth.
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  Okay. So these are phenomenal top line and bottom line figures.
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  From your perspective, what were the main engines driving this?
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  Was it mostly about prices?
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  Volume, or something more fundamental, maybe operational efficiency.
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  Let's try and break down the revenue and the costs. Oh, it was a powerful combination,
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  really. But you're right. Prices were undoubtedly a major tailwind, a huge factor. Okay.
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  The average selling price for crude palm oil, CPO, that was up a significant
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  21.6%, almost 14,500 IDR per kilo compared to last year.
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  21%, that's substantial. It is. But what's even more dramatic is Palm Kernel, PK.
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  Those prices nearly doubled. They soared an astounding 92.4% to almost 12,000 IDR per kilogram.
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  Whoa, 92%. Okay, nearly doubled. Yeah, it's huge. So these price hikes just
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  provided a really strong boost to the top line, no question.
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  And in terms of what they sold, CPO is still the big one, right? Oh, yeah, absolutely.
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  CPO still accounts for the lion's share, about 85% of total revenue.
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  That generated over 8.3 trillion IDR. Okay.
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  PK made up the remaining 15%, roughly 1.42 trillion IDR. So it's smaller,
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  but clearly growing in importance, especially with those prices going through the roof.
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  Makes sense. And volume, how did that play out? It's interesting.
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  While CPO sales volume was actually slightly down, just 0.7%,
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  to about 574,000 metric tons.
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  Oh, okay. So slightly less sold. Slightly less sold, yes.
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  But peaky sales volume increased by 4.8% to nearly 119,000 metric tons.
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  But here's what's really insightful. Despite that small dip in CPO sales volume,
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  Bumatama actually boosted its total CPO output production by a significant 17%
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  to over 608,000 tons in the first half.
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  Ah, okay. So they made more, even if they sold slightly less in the period.
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  What does that tell us? It tells us they're successfully ramping up production.
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  Maybe building inventory, maybe getting ready for future demand.
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  It's really a testament to their internal operational strength,
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  especially when market dynamics get tricky like this.
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  Right, being able to produce more efficiently. Absolutely.
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  And it's not just about what they're producing, but how efficiently.
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  Operational productivity was key. How so? We saw higher oil extraction rates,
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  OER. That's how much oil they get from each bunch of fruit.
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  That climbed from 22.2% in the first half of 24 to 22.4% in 25.
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  Doesn't sound like much 0.2%. You'd think so, but even a fractional increase
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  like that, when you're talking about these vast volumes, it makes a real difference to the bottom line.
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  Okay, fair point. And their fresh fruit bunch, the FFB contribution,
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  also increased significantly.
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  Their own internal production was up 12 percent.
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  And the FFB they sourced externally, you know, from smallholders,
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  that rose even more dramatically up 29 percent in the second quarter compared
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  to last year. Wow. 29 percent externally.
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  Yeah. These are all signs of enhanced efficiency, better yields and pretty effective
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  sourcing strategies, too.
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  So getting more out of their own land and also managing external supply well. Exactly.
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  And if we connect this back to the bigger picture, you can really see the resilience
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  of palm oil as a commodity right now. How do you mean?
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  Well, the company explicitly states in their materials,
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  Palm Oil's strong fundamentals allowed it to regain market share from other
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  oils, other substitutes, even with all the geopolitical noise.
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  Like what kind of noise are they referencing?
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  They mention it directly in the investor circular, things like Trump's tariff
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  drama, other trade barriers some countries put up to protect their own markets,
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  and even military aggression occurring in several continents.
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  So pretty direct acknowledgement of the global chaos. Very direct.
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  So this isn't just a company reporting numbers in a vacuum. It's kind of a testament
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  to the commodity's competitive strength and how Pumatama is managing to leverage that.
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  That's a huge point, palm oil actually regaining market share.
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  How significant was that price advantage they mentioned? It was very significant.
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  A key indicator they point to is the average palm oil discount compared to soybean oil. Okay.
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  In the second quarter of 2025, palm oil was trading at a discount of $155 UF
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  per ton against soy oil. That sounds like a lot. It is.
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  Especially when you compare it to earlier in the year. In Q1,
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  it was actually at a $20 premium.
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  And back in Q4 of 24, it was at a $115 premium.
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  So a massive swing into discount territory. Exactly.
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  And that substantial discount makes palm oil a much, much more attractive option for buyers globally.
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  It directly impacts sales and revenue. Right. Basic eonomics kicks in. Totally.
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  And add to that, Bumatamas focus on things like precision agronomic practices
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  and efficiency enhancement through innovation, phrases from their presentation
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  that highlights their strategy to deal with challenges like,
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  well, extreme weather swings, which can directly hit production yields.
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  So controlling what they can control internally.
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  Precisely. It's about operational excellence meeting those macro challenges head on.
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  OK, so revenue soared, mainly thanks to price, but also decent production.
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  But what did it cost them to achieve this? Let's dig into the expenses.
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  Cost of sales? That was up too, right?
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  It was up 23.6% to 7.17 trillion IDR. And why was that?
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  The company attributes it mainly to two things.
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  A rise in the average purchase price of those fresh fruit bunches,
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  the FFB. Right. Makes sense if CPO prices are high. Exactly.
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  Driven by those elevated CPO market prices. And also, they say,
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  increase competition for the external FFB supply.
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  Plus, they also had a higher volume of fertilizer applications during the period.
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  Okay, so input costs definitely rising alongside their selling prices.
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  Yeah, that's the dynamic. What about other costs, selling expenses?
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  Those rose more modestly, 3.6%, mainly due to higher fuel prices,
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  which impacts, you know, freight and loading costs. Understood. And general and admin?
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  G&A increased 8.1%. They attribute that to standard things like annual salary
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  increments and also some donations to nonprofits and government programs. Okay.
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  Any good news on the cost side? Well, finance costs actually decreased slightly
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  by 1.6 percent, mainly because they had a lower loan balance outstanding.
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  So paying down debt helped there. Discipline. And here's a really interesting
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  turnaround. Foreign exchange.
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  The group recorded a net foreign exchange gain in the first half of 2025.
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  A gain. How'd that happen? Usually it's a cost.
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  Right. It was a significant shift from a loss in the previous year.
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  It was primarily a translation gain on their U.S.
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  Dollar borrowings because of how the Indonesian rupiah moved against the U.S. dollar.
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  Essentially, the currency movements worked in their favor this time.
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  Huh. Sometimes you get lucky with Forex. Sometimes you do. But finally, taxation.
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  That saw a really notable surge. Income tax expense jumped 104.8% to 569 billion
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  IDR. Doubled. Wow. Why so high?
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  Well, largely, it's just a consequence of the much higher profit before tax.
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  More profit means more tax. Plus, there was withholding tax on interim dividends
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  paid out from subsidiaries.
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  Right. The price of success, you could say? You could put it that way,
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  yes. Okay, so that's the income statement.
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  What about the balance sheet? What does that tell us about the company's underlying
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  health, its strategic investments, and how did cash actually move through the
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  business? Good questions.
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  Looking at their statement of financial position, non-current assets,
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  think property, plant, equipment, the long-term stuff,
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  increased by 189 billion IDR to over 16.17 trillion IDR. Okay.
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  Where did that growth come from mainly?
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  It was mainly substantial capital expenditure, CapEx.
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  Things like construction for mill projects, new infrastructure for getting the
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  fruit bunches out, new mill machinery to boost productivity,
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  vehicles, heavy equipment, buildings.
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  So clear reinvestment into the core business. Absolutely.
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  A very clear forward-looking strategy to reinvest in their productive capacity.
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  What about current assets, the short-term stuff? Those also rose by $376 billion
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  IDR to $5.36 trillion IDR.
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  That was largely driven by higher inventories and also more cash and short-term
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  deposits on hand. Higher inventories. Why was that? Just making more.
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  Well, interestingly, they specifically mentioned that the increase in inventories
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  was mainly due to delays in actually delivering the products. Delays.
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  Why? Poor road conditions in some areas. And those poor road conditions,
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  they were apparently caused by high rainfall levels towards the end of the period. Huh.
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  So literally getting bogged down by the weather even affects the balance sheet. Exactly.
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  It's amazing, isn't it? It highlights how even for these huge,
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  sophisticated companies, you're still fundamentally dealing with physical infrastructure
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  and the environment. It's a good reminder.
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  Global supply chains are only as strong as, well, sometimes a muddy road.
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  That's a great way to put it. And connecting this to their liabilities,
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  total liabilities increased by 482 billion IDR to nearly 4.97 trillion,
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  mostly driven by a rise in current liabilities.
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  Okay, and related to the deliveries. Partially, yes.
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  Specifically, an increase in sales advances, again, tied to those disrupted
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  deliveries from the poor roads and also just higher taxes payable because of
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  the higher profits. Got it.
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  So this raises an important question for me. How does a company like this balance
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  making these big investments in its future, like the machinery and infrastructure,
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  with returning value to its shareholders now?
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  That's the classic balancing act, isn't it? And Bumi Tama's actions here give
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  us a pretty clear signal.
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  They upgraded their dividend policy back in late February. And they propose
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  an interim dividend of 3.63 Singapore cents per share.
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  Now get this, that's a 203% increase from the interim dividend last year.
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  200% increase. Wow, that's a statement.
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  It absolutely is. It reflects management's growing confidence clearly in their
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  future cash flow and their financial stability.
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  It's not just a random bump. It's a deliberate signal of strength and commitment
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  to shareholders. Okay, a strong vote of confidence indeed.
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  And how does that fit with their overall financial structure?
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  Are they taking on debt to do this? Actually, no.
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  Quite the opposite. Their presentation material highlights a really positive
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  trend in their gearing ratio. Gearing.
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  That's debt relative to equity, right? Leverage. Exactly. And that ratio has
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  been steadily declining over the past five years, which indicates significant
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  deleveraging, paying down debt.
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  So they're getting financially stronger, less reliant on debt. Precisely.
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  And that stems directly from the strong operational cash flow they've been generating. Yeah.
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  It's a fundamental sign of a healthy company. They're not just making profits.
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  They're managing debt effectively, building a more secure foundation.
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  Okay. Let's trace that cash flow story then. How did the cash actually move?
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  Operating activities first. Right.
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  From operations, they generated a really robust 2.07 trillion IDR in net cash.
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  That's a strong increase from about 1.08 trillion in the first half of 24.
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  Nearly doubled the cash from operations. And that was mainly from?
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  Primarily just higher cash receipts from customers, thanks to those much better
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  average selling prices for the Palm products we talked about earlier.
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  More cash coming in from the core business, always what you want to see. Definitely.
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  Okay, what about inverting activities? You mentioned the big capex. Right.
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  So for investing activities, the group actually used 510 billion IDR in net cash during the period.
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  Use cash. Okay, So an outflow, how does that compare?
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  It's a shift. In the first half of 24, they actually generated about $41 billion from investing.
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  So this change clearly reflects those substantial acquisitions of property, plant, and equipment.
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  We discussed the mills, the infrastructure, vehicles. The reinvestment we talked about. Exactly.
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  It's a clear sign of investing in future growth and productivity,
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  even if it means a temporary cash outflow on the investing line.
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  Now, this outflow was partially offset by a decrease in something called plasma
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  receivables. Plasma receivables? What's that?
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  That's basically money owed to the company by smallholders they partner with.
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  That decreased, likely helped by the higher FFB prices the smallholders were
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  getting, and also some refinancing of plasma bank loans. Okay, got it.
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  So, big outflow for investment overall. And finally, financing activities,
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  where the dividends and debt payments show up. Right.
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  Net cash used in financing was $1.48 trillion IDR. That's way up from $496 billion
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  used in the first half of 2024.
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  A big increase in cash used there? Why?
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  Mainly due to those significant dividend payments we just talked about.
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  They totaled $1.4 zillion IDR. Ah, okay.
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  That huge dividend increase really shows up here. It certainly does.
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  That total includes the final dividend for the full year 2024,
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  plus that hefty FY25 interim dividend
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  paid out from subsidiaries to their non-controlling interests, basically,
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  the minority shareholders in those subsidiaries. Right.
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  Plus interest payments. Plus interest payments on their outstanding debts during the period, yes.
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  So the story is, generate strong cash from operations, invest a good chunk back
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  into the business, and then use a significant amount to reward shareholders and service debt.
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  Makes sense. A pretty clear cycle. So we've seen these impressive numbers,
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  the drivers, the investments, but what does it all mean for the road ahead?
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  What's Bumatama's own perspective on the industry and their future performance?
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  Well, they are realistic.
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  The company acknowledges that CPO prices are expected to remain volatile and
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  potentially they say trend downwards.
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  OK, so anticipating some price pressure, perhaps?
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  Potentially. It's not a surprise, really. CPO prices are influenced by that
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  whole basket of global factors we touched on.
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  The shifting geopolitical landscape, U.S.
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  Trade tariffs, the global supply and demand for all vegetable oils, not just palm.
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  And the weather. Can't forget the weather. And definitely the unpredictable
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  weather fluctuations, exactly.
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  So, a cautious outlook on pricing in the near term. But what about the longer
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  view? Are they still confident?
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  Yes, it seems so. Despite acknowledging that short-term volatility,
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  they state that the long-term fundamentals of the palm oil industry are expected to remain robust.
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  Okay, so underlying confidence remains. It signals a confident,
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  if cautious, overall outlook.
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  And their core strategy moving forward reflects this. They're focusing on ensuring
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  business continuity, maintaining a proactive replanting program,
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  which is crucial for long-term yields.
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  Right, keeping the trees young and productive. Exactly.
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  Also, enhancing efficiency through innovation, implementing agricultural best
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  practices, and exercising effective cost management.
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  All things designed to navigate those potential price fluctuations.
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  Controlling the controllables again. Pretty much.
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  And they also anticipate that the second half of the year will be the bigger
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  half for production. that suggests a seasonal uptick in output is expected,
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  which is pretty common in this industry.
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  Okay. So this brings up a point for me.
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  Given all these external uncertainties, geopolitics, weather,
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  tariffs, how much can a company like this really control its own destiny?
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  That's the multi-billion dollar question, isn't it?
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  And Bumatama's approach seems to be doubling down on what they can control.
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  Those strategic pillars we just mentioned, internal discipline.
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  Agronomic practices, cost management, they're all specifically designed to mitigate
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  those external challenges.
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  It's very much an internal locus of control strategy. Makes sense.
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  Anything else working in their favor? Well, their sheer scale and location help too.
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  Their considerable planted area, about 186,000 hectares, is strategically located
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  in regions of Indonesia known for generally good precipitation and temperature,
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  naturally well-suited for oil palm cultivation.
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  So a bit of a natural buffer against some weather extremes, perhaps.
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  It provides somewhat of a natural buffer, yes.
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  Doesn't make them immune, but it helps compared to being in less ideal zones.
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  So it really is a classic example of balancing those big macroeconomic forces,
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  which are largely beyond their direct control, with really disciplined,
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  micro-level operational excellence,
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  consistent investment, and strategic planning.
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  They're not just, you know, hoping for the best market conditions. Definitely not.
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  They're actively trying to build resilience right into their operations,
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  regardless of the external weather, so to speak. We've covered a lot today.
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  We went from Bumatama Agri's really surging profits, driven largely by higher
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  prices, but also backed by improved efficiency.
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  Right. And that impressive production increase. To the impact of things as basic
• 19:47
  as bad road conditions affecting inventories and deliveries and the rising cost
• 19:51
  of inputs like fertilizer. Yeah, the real ground-level challenges.
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  We've also looked at their strategic investments aimed at future productivity
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  and their confident yet cautious outlook, even though they anticipate continued
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  market volatility influenced by all sorts of global events.
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  A complex picture, but a strong performance overall. Definitely.
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  So what stands out to you as you reflect on Bumatama's journey through this period?
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  As you, our listener, consider other companies or industries,
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  maybe think about how these big macro-level uncertainties, geopolitical shifts,
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  commodity price swings are met or can be met with deliberate,
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  disciplined operational strategies right down at the company level.
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  It really is a testament to how internal focus and operational discipline can
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  help buffer those external storms. Absolutely.
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  Well, that's it for this deep dive. We hope you're leaving with a clearer,
• 20:40
  more informed perspective on navigating the world of corporate financials and
• 20:44
  the fascinating and pretty complex palm oil industry.