UPDATE: Golden Agri 4Q Net Profit Soars, Aims Plantations In Africa

Golden Agri-Resources Ltd. (E5H.SG) said Monday the company will spend US$450 million in capital expenditure in 2011 and start planting palm in Africa next year after announcing that its fourth-quarter net profit more than doubled.

Golden Agri will add between 20,000 and 30,000 hectares of new palm oil plantations in 2011 and double its refining and oilseed crushing capacity in China, a key growth market, Franky Oesman Widjaja, chairman and chief executive, told reporters at a post earnings press briefing.

Its total plantations in Asia grew 3.6% last year to 442,470 hectares as at Dec. 31 with an average plant age of 12 years.

Singapore-listed Golden Agri, the world's biggest palm planter by area under cultivation, will add 396,000 metric tons of refining capacity and 1.3 million tons of crushing capacity in China this year. It will also add new products and increase its retail operations in the world's most populous country.

"We will use our distribution network in China to add new products. That market is big," Widjaja said, adding the company will explore also growth in India.

The company aims to start planting palm in Liberia in 2012 and is exploring plantations in other African nations as commodity firms seek to expand to new geographies to meet rising demand for food.

In September, Golden Agri had announced its first investment into a fund created by Verdant Fund LP to plant palm in Liberia. The company is currently laying the groundwork for the plantations, he said.

Golden Agri is also exploring expansion into sugar and rubber businesses, Widjaja said without giving details.

Earlier in the day, Golden Agri reported that net profit for the three months ended Dec. 31 was US$1.17 billion, compared with US$472.7 million a year earlier, helped by higher prices of palm oil and by an over three-fold increase in fair value gains on its Indonesian plantations.

The company's fair value gains on its biological assets rose to US$1.37 billion in the quarter, compared with US$303 million in the year-earlier period, Golden Agri said in a statement to Singapore Exchange.

Crude palm oil on the bellwether Malaysian derivatives exchange has risen around 75% since mid last year amid a broad increase in commodity prices and supply tightness, as loose monetary policy in many countries created liquidity and consumer demand rebounded in Asia.

The company said its core net profit, excluding fair value gains, more than doubled to US$146 million in the fourth quarter. Revenue in the quarter rose 85% to US$1.19 billion from US$643 million.

"We will continue to be prudent in executing our operational strategy, leveraging our core competitiveness and capturing any strategic opportunities that may arise, in order to continue delivering long-term shareholders' returns," the statement quoted Widjaja as saying.

Demand for palm oil is expected to be robust, especially from large developing countries, such as China and India. Vegetable oil stocks are likely to remain "tight" and support palm oil prices, Widjaja said.

Golden Agri hopes to get certification for all its existing units from the Roundtable on Sustainable Palm Oil by 2015 and will submit a time-bound plan to the industry sustainability body by March.

It has applied for membership of the industry body after coming in for criticism for hurting the environment that led to its units losing global food giants Nestle S.A. (NESN.VX), Unilever N.V. (UNA.AE) and Burger King Holdings Inc. (BKC) as customers last year.

"They haven't resumed their purchases from us but we expect them to do so soon," Rafael Concepcion, executive director, told Dow Jones Newswires on the sidelines of the press conference.

Emails to the three food companies seeking comment weren't immediately answered.

-By Gaurav Raghuvanshi and Surabhi Choudhary; Dow Jones Newswires; [phone]; [e-mail]