GMG Global : Registers Revenue Of S$442.8 Million For 1H2014 On Increased Sales Tonnage

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GMG registers revenue of S$442.8 million for 1H2014 on increased sales tonnage

• Sales tonnage increased significantly by 24% to 168,959 tons in1H2014

• Continued weakness in natural rubber market price impacted the Group's bottom line

• Long-term prospects of the natural rubber industry remains positive

Financial Highlights	6 months ended 30 Jun 14	6 months ended 30 Jun 13	Change
Financial Highlights	S$mil	S$mil	%
Revenue	442.8	491.7	(9.9)
Gross Profit	27.6	52.4	(47.4)
Gross Profit Margin (%)	6.2	10.7	-
Share of profit of associates	(5.6)	5.6	n.m.
Net profit attributable to shareholders	(14.8)	14.1	n.m.
EPS (cents)	(0.24)	0.17	-

n.m. - not meaningful

SINGAPORE - 25 July 2014 - Mainboard-listed GMG Global Ltd ("GMG" or "the Group"), a vertically-integrated producer of natural rubber engaged in the planting, cultivating, tapping, processing, marketing and exporting of natural rubber, reported that sales tonnage continued on the uptrend on the back of rising output from the Group's processing operations. Sales tonnage in the first half ended 30 June 2014 ("1H2014") rose 24% to 168,959 tons, from 136,449 tons in the same period in the previous financial year ("1H2013").

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"We have implemented a series of measures to increase the efficiency of our 12 processing plants. This has resulted in a boost in average utilisation rate from the average 65% at end 2013. We target to achieve more than 70% by end of this year," said Mr Yao Xingliang, GMG's Chief Executive Officer.
However, the continued weakness in the market price of natural rubber has affected the Group's revenue and bottom line. GMG's average selling price per ton of natural rubber declined by as much as 38%, from S$3,604 per ton in 1H2013 to S$2,621 per ton in 1H2014. The Group registered revenue of S$442.8 million for 1H2014. This represents a year-on-year ("y-o-y") decrease of 9.9%, compared to 1H2013.
Also as a result of weak rubber prices, in addition to foreign exchange loss in one of its subsidiaries and high operational cost in its palm oil business in Gabon, the Group's 35%-owned associate, SIAT SA, incurred a loss in 1H2014. This largely contributed to the S$5.6 million share of associates' loss recorded by the Group, as opposed to a gain of S$5.6 million in 1H2013. SIAT SA owns and invests in natural rubber and palm oil businesses in Cote d'Ivoire, Ghana, Nigeria and Gabon.
Overall, in line with the profit guidance announcement released to SGX on 2 July
2014, the Group recorded a net loss attributable to shareholders of S$14.8 million in
1H2014.
Commenting on the results, Mr Yao said, "The natural rubber industry is cyclical and sensitive to the forces of demand and supply. Whilst demand remains stable, there has been a supply overhang in the market that has affected prices. However, we are in this business for the long term, and we are strongly positioned to ride out the current market volatility with our sound business model, healthy balance sheet and experienced management team."

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As at 30 June 2014, the Group's balance sheet remained healthy with a low net gearing ratio of 0.22, and net asset value per share of 10.37 cents. The Group has sufficient available liquidity to cover short term repayments and capital expenditure projections.

Business Outlook

The Group's performance is highly dependent on several economic factors such as market price for natural rubber and currency fluctuations. Barring adverse global developments, GMG expects natural rubber market prices to fluctuate near current levels for the second half of FY2014. In June 2014, the price of natural rubber was averaging US$1,789 per ton.
In view of the on-going minimum wage negotiations in Africa and Indonesia, the Group also expects energy and manpower cost to continue rising, potentially diluting profit margins in these markets.
Mr Yao said, "The operating environment of GMG remains challenging in view of the prevailing oversupply, rising labour and energy costs. Notwithstanding this, we will continue to focus on developing our market presence, managing our operating costs and optimising our production to improve our overall operating performance. This will enable us to take full advantage of opportunities when the global natural rubber market conditions turn favourable.
In the meantime, we will continue to keep a lookout for opportunities in the marketplace while anticipating the prices of natural rubber to bottom out."

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ABOUT GMG GLOBAL LTD

Listed on the Mainboard of the Singapore Exchange, GMG focuses primarily on the production and supply of premium natural rubber to the European, American and Asian markets.

Through its various subsidiaries and associates, GMG currently manages more than 48,000 hectares of rubber plantations located across Africa and Asia; and operates 10 rubber processing plants located in Thailand, Indonesia, Cameroon, Gabon and Cote d'Ivoire with a total annual capacity of 482,000 tons.

Our products include tyre-grade rubber used in the manufacture of industrial vehicle tyres; and centrifuged and blocked rubbers of latex used in the manufacture of medical-grade gloves and contraceptives. Its customers include some of the world's top tyre manufacturers and medical equipment companies.

With values firmly rooted in sustainability practices and corporate citizenship, we are committed to constant engagement with stakeholders to create mutually beneficial relationships.

GMG is a subsidiary of China's Sinochem International Corporation ("Sinochem International") which is listed on the Shanghai Stock Exchange. Sinochem International is a diversified international conglomerate which specialises in trading, manufacturing and transportation of chemicals (including agricultural and horticultural), plastics, rubber, and metallurgy products. Sinochem International is the top distributor and one of the largest producers of natural rubber in China.

For more information please visit GMG's website at: www.gmg.sg