[RAM] RAM Ratings affirms Bumitama's sukuk at AA2/Stable

RAM Ratings has affirmed the AA₂/Stable rating of Bumitama Agri Ltd’s (Bumitama or the Group) RM2.0 bil Islamic MTN Sukuk Musharakah (2014/2029). This reflects the Group’s good operational efficiency and healthy cash flow generation that will continue to support its strong financial metrics.

Bumitama ranks among the top 10 listed plantation firms regionally (by planted area), with a total cultivated area of 186,422 ha in Indonesia as at end-June 2024. A large portion of Bumitama’s palms (about 78%) are in the prime-yielding phase.

Bumitama’s debt levels have remained stable, with gearing maintained at a strong 0.23 times as at end-June 2024. Annualised funds from operations debt coverage (FFODC) also stayed steady at a robust 0.70 times in 1H FY Dec 2024 against the 0.69 times of a year earlier, with excess cash distributed as dividends. Even under our conservative assumptions – a reduced average CPO selling price and slower recovery of FFB production – Bumitama’s FFODC will still be strong at above 0.55 times over the next two years, with gearing remaining below 0.25 times as debt levels continue to hold steady. The rating is further backed by healthy prospects for fresh fruit bunch production in view of a supportive tree profile and good plantation management.

In FY Dec 2023, Bumitama’s operating profit before depreciation, interest and tax (OPBDIT) slipped 19.1% to IDR4.6 tril, resulting in OPBDIT margin shrinking to 29.8%, as CPO selling prices moderated after the 2022 high. The Group’s internal fresh fruit bunch (FFB) output also fell from the previous year’s record high as the delayed impact of unfavourable weather conditions caused by the triple-dip La Nina affected crop yields. FFB output is projected to continue to shrink in fiscal 2024 before picking up again next year as more favourable weather conditions set in.

The Group’s inherent vulnerability to volatile commodity prices, the challenging operating environment in Indonesia and international regulatory scrutiny of environmental issues are moderating factors to the rating.


Analytical contacts
Julian Chan
(603) 3385 2486
julian@ram.com.my

Thong Mun Wai
(603) 3385 2522
munwai@ram.com.my

Media contact
Sakinah Arifin
(603) 3385 2500
sakinah@ram.com.my