GMG Global

GMG Global: In-line with its profit warning, GMG recorded 3Q14 net loss of $4.9m versus a net profit of $1.5m the previous year, taking 9M14 net loss to $19.6m (3Q13 net profit at $15.7m). Revenue for the quarter fell 24.7% to $180.8m due largely to a fall in average selling prices of rubber which stood at $2,179 per MT for 3Q14. Bottom-line was further weighed by associate losses at $0.8m versus profit contributions of $2.6m, as a result of weak rubber prices and high operational cost in its palm oil business in Gabon. Overall, 9M14 saw the group recording a 17% increase in sales tonnage to 251,918 tons, with average selling prices of natural rubber at $2,475 (-27% y/y) over the same period. Going forward, cost pressures are expected to remain as plantation and processing costs are likely to increase in Africa and Indonesia which will impact margins. Although the prices of natural rubber remain soft with the supply overhang, GMG is of the view that this is part of the cyclical nature of the business. The group aims to focus on developing its market presence and manage operating costs so that it can achieve optimal operational efficiencies and higher economies of scale. GMG expects natural rubber market prices to hover around US$1,532 per ton for the rest of 2014.