H1 2026 CPO Production Up 5.6%, Net Profit Grows 20.6%
Indonesian Palm Oil News (IPO News), Jakarta — Kencana Agri Limited entered 2026 with positive momentum. Amid challenges related to plantation productivity and rising operating costs, the company delivered improved performance during the first half of 2026. At the same time, however, Kencana Agri is entering an important phase in managing its plantation assets, with replanting becoming an increasingly important component of its long-term strategy.
The latest results show that Kencana Agri’s crude palm oil (CPO) production reached 99,201 tonnes in the first half of 2026, representing an increase of approximately 5.6% from 93,981 tonnes recorded in the same period of 2025. The increase was accompanied by an improvement in the company’s oil extraction rate (OER), which rose from 21.0% to 21.4%.
From a financial perspective, the company also delivered positive results. Revenue in H1 2026 reached approximately US$110.8 million, an increase of 27.1% year-on-year. Net profit rose 20.6% to US$11.8 million. CPO sales reached US$94.3 million, representing approximately 30% growth, supported by higher sales volumes and an improved average selling price.
Higher Production, but Plantation Challenges Are Emerging
The increase in CPO production is clearly a positive signal. Nevertheless, Kencana Agri continues to face challenges at the plantation level. During H1 2026, production from the company’s nucleus estates declined by approximately 5%, while nucleus fresh fruit bunches (FFB) yield decreased by around 2.9% to 6.6 tonnes per hectare. One of the factors affecting this performance is the changing age profile of the plantations, with an increasing proportion of immature and older palms.
This situation makes replanting a critical component of Kencana Agri’s long-term strategy. Replanting is not a strategy that delivers immediate results. When old palms are removed and replaced with new ones, production can come under pressure during the early years. However, the process is essential to rebuild the productive plantation base and maintain the company’s ability to generate FFB and CPO sustainably over the longer term.
In other words, Kencana Agri is currently entering a transition phase: maintaining productivity from existing plantations while simultaneously building the production foundation for the future.
Plantation Area of Approximately 67,885 Hectares
The scale of its plantation assets is an important foundation for this strategy. Company data indicates that Kencana Agri had approximately 67,885 hectares of planted area as of FY2025, providing a substantial production base to support long term growth.
In 2025, Kencana Agri processed approximately 898,505 tonnes of FFB and produced around 187,295 tonnes of CPO. These figures demonstrate the company’s significant production base, while also highlighting the importance of maintaining plantation productivity as the age profile of its estates changes.
Kencana Agri also operates seven palm oil mills with a combined processing capacity of approximately 335 tonnes of FFB per hour, as well as two kernel crushing facilities with a combined capacity of around 435 tonnes per day. This integrated infrastructure provides the company with an important advantage, allowing it to manage a substantial portion of the value chain from plantation cultivation to processing.
2025 Provides a Strong Foundation for Growth
The company’s 2025 performance also provides an important indication of the momentum carried into 2026. Kencana Agri’s CPO sales volume increased 17.3% to 203,314 tonnes in 2025, compared with 173,323 tonnes in 2024. The average CPO selling price also increased by approximately 6%, from US$785 to US$832 per tonne.
This performance indicates that Kencana Agri’s growth has not been driven solely by commodity prices, but also by higher production and sales volumes. As the company enters the second half of 2026, the key challenge will be maintaining this momentum while its replanting programme continues.
Replanting as an Investment in Long Term Productivity
For the palm oil industry, replanting is fundamentally a long term investment. Newly planted palms require several years before reaching their optimal productive potential. As a result, companies must carefully manage the balance between mature palms, immature areas, replanting costs and cash flow requirements.
Kencana Agri appears to recognize this challenge. The company has continued to increase production and sales during H1 2026 while simultaneously progressing with its plantation rejuvenation programme.
This strategy is becoming increasingly important because future growth in the palm oil industry will depend not only on CPO prices, but also on yield per hectare, plantation quality, mill efficiency, cost management and the ability to maintain sustainable production.
Looking Ahead to 2026–2027
With higher CPO production, positive financial performance and a planted area of approximately 67,885 hectares, Kencana Agri has a solid foundation from which to enter its next phase of growth. However, the success of this strategy will depend heavily on the company’s ability to manage the transition associated with replanting. The new palms planted today represent an investment in the company’s production capacity for the years ahead.
For Kencana Agri, replanting is not simply about replacing old palms with new ones. It is about rebuilding the company’s production engine for the next growth cycle. If the newly planted areas eventually achieve optimal productivity and processing efficiency continues to improve, the replanting programme could become an important factor supporting Kencana Agri’s long term performance.
Therefore, Kencana Agri’s story in 2026 is not simply about higher production and profit. More importantly, the company is laying a new foundation to ensure that its palm oil business can continue to grow sustainably over the long term.
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