THE EFFECTS OF THE WORLD CPO PRICES, MACROECOMONY, AND CAPITAL STRUCTURES ON THE PROFITABILITY OF PALM OIL COMPANIES

The background of this study is the phenomenon known as the diminishing of the world CPO prices, analysing other external factors such as Indonesia’s macroeconomy, interest rate, exchange rate towards dollars, inflation rate and capital structure of the palm oil subsector. It implements the Panel Data Regression analysis with the Fixed Effect Model to determine the external and internal factors of ROE in the palm oil subsector. The estimated doubled linear regression would result on the positive significance of the world CPO prices towards the ROE, the negative signifiance of the inflation rate towards the ROE, the positive significance of Growth towards the ROE, and the negative significance of Size towards the ROE.

Agriculture is the primary sector in Indonesia. In 2016, it contributed 13.47 percent of the GDP in total dari total keseluruhan sektor menurut lapangan usaha, with plantation as one of the subsector of agriculture contributed 3.45 percent of the GDP (Central Bureau of Statistics, 2016). Palm oil gained the first rank in the prime plantation commodity. The commodity contributed in Indonesia's economy through exports, the diminishing of poverty and employment. The main product of this commodity is crude palm oil (CPO), the main ingredient for an alternative energy to replace fossil fuels, the biodiesel. Furthermore, CPO is also used to produce other daily utilities. The data from the Directorat General of Plantation showed that the production of palm oil has increased annually, followed by the increasing volume of palm oil exports from 2012 to 2015, but it was not followed up by the annually fluctuative USD export values. There was a phenomenon in 2015, where the CPO commidity price experienced its lowest rank for the last five years. Executive Director of Gapki, Fadhil Hasan stated that "There were several speculations on reason for price hard to increase, which was the fall of the world crude oil price, which currently reach the total of USD30 / barrell" (Business, January 20, 2016). In 2012, the world CPO prices were around 1.061 USD per metric ton and decreased into 566 USD per metric ton in early 2016, or an average diminishing of 9,3% per year. It indicated the diminishing marginal profit of CPO, which was indicated on affecting the profitabilities of palm oil companies. Another external factor which could affect the companies' financial performances was Indonesia's macroeconomy, such as exchange rate, increase such risk, that it could diminish was safe to assume that macroeconomy significantly dan Sufia (2010) stated the decline of the exchange caused a rise of foreign debts in the amount of US exchanges rates would diminish the net margin the companies and investors. Sudiyatno (2010) roeconomy was interests, as it affected the operational whether it was high or low, could affect the companies' al (2011), inflarion also influenced the currency diminish the profits of the investments. The situations and the increase of production costs affected performances.
decision of the companies on the funding structure abilities and affect the risks (Joni and Lina, 2010).
(2012) on analysing the relation between the capital performances as a research for long-term and short-term significant relation of growth towards the ROA, ROE an research implemented the long-term and shortrelation of growth as the dependent variables, while independent variables. The result showed that both short fundamental factor of macroeconomy condition would especially the operational Source: IndexMundi 2016, important for palm oil return of investments the palm oil subsector companies' performances in capital structure also Therefore, several companies, externally rupiah exchange rate, and return on asset of 2017.
policies which influenced changing factors on the national budget, (2010) stated that the worsening condition diminish a company's significantly affected exchange rate of rupiah US dollars. The loss margin of the companies, (2010) stated that the operational cost for companies' pofitabilities.
currency rate of the The combination of affected negatively on structure would determine 2010). John and Lina capital structure and term debts, the total of and EPS. As stated -term debts, total of while the ROA and short-term debts and total of debts had a significant realtion with the ROA, whereas the ROE had a significant relation to all the indicators of the capital structure.

METHODS OF RESEARCH
This quantitative research described facts or phenomenons statistically and featured the relations between such facts using mathematic models. The variables of this research consisted of the exchange rate of rupiah, interest rates (SBI), inflation from Bank Indonesia, and long debt to total asset, total debt to total asset, size, growth and sales growth obtained from the companies' financial reports. There were seven selected companies emittances of the palm oil subsector. It also implemented the descriptive approach that provided the conditions of those palm oil companies from 2012 to 2017. The economometric approach was also applied to analyse the influences of the world CPO prices, the macroeconomy and the capital structure towards the palm oil companies listed on BEI from 2012 to 2017. The research implemented the the panel regression data. Panel Data Regression Method. The panel data regression model is a data which combines the cross section data and the time series data. Here is the design model. The estimated result of the regression model profitability bellow 5 percent (INF), Debt to total Asset (DA), Growth (Gr) an affect significantly on the return on equity The result showed a variables on ROE. If there was ROE up to 5.98. This was in CPO prices would boost the markets. This was also consistent world oil prices affected positively macroeconomy variable was hypothesis, that it would affected inflation rate, the ROE would (2009), that inflation affected negatively prices and operational weight The variable of capital significantly on the ROE. A 1 per performance to 4.951, as stated asset on the ROE. This was also would debt at a certain rate, (interest expenses, provisions excessively until exceeded its company's financial performance, affected significantly and positi on equity up to 1.024. It also was positively on ROE, since palm and new land expansions to increase on how growth provided positi The size variable affected increase would decrease the initial hypothesis because of productive plantation and inefficient production costs that reduced regarding the negative effects especially from their total assets effects. Companies with small compared with companies with efficiently by producing large quantities The Dupont Analysis on the picture above had a low average of than 1. It was used to measure the efficiency of company assets for producing sales, indicating the inefficiencies of the management on those assers and the possible problem of either the management or the production. more than one average asset turn over, mean RJOAS, 1(85), January 2019 372 of the regression model showed that independen and 10 percent, are world CPO prices (CPO), (DA), Growth (Gr) and Size (Sz).In the other word return on equity of palm oil companies.
positive, significant relation between the was an increase on a price, the CPO prices in line with the initial hypothesis, in which the companies' sales rates, especially for companies consistent with a research by Widokartiko (2015), positively on companies' profitabilities. Another inflation, as the result showed a data consistent affected negatively to ROE. If there was a 1 percent would decrease to 27.618, as explained by Dwijayanti negatively to ROE. A high inflation rate would budget, which made a company's profit decreased capital structure for debt to total asset affected percent increase of debt to total asset would stated by Riris (2014) dan Tedy (2015) on the negative also in line with the static trade off theory, in rate, and the tax shield was at the same dengan s, and other costs realted to loans). If a company its limit, there would be a risk of bankruptcy, which performance, and affected the decline of ROE. The positively to ROE, as a 1 percent growth would was similar with the initial hypothesis that asset palm oil companies required asset expansions as increase the production of palm oil, and Salim positive impacts on the company's profitabilities.
affected negatively and significantly on the ROE, return on equity to 0.7836. The results did not of the inefficient assets in oil palm companies inefficient oil palm processing plants. This would reduced profitabilities, as explained by Soumadi effects of size to the ROE. Based on the size assets, the company profits would not always small total assets did not necessarily obtain smaller with large total assets, as long as those assets quantities and minimizing production costs.

Dupont Analysis on Palm Oil Companies, 2012 -2017
The Dupont Analysis on the picture above had a low average of asset turn over used to measure the efficiency of company assets for producing sales, indicating the inefficiencies of the management on those assers and the possible problem of either the management or the production. Out of the 7 companies, only Sinarmas re than one average asset turn over, meaning it was not efficient enough to manage independent variables with (CPO), Inflation Rate In the other word those variables world CPO price would increase the the rise of the world companies with export who stated that the Another significant consistent with the early percent increase of Dwijayanti dan Naomi would increase the daily decreased. affected negatively and would decrease the ROE negative debt to total in which a company dengan biaya-biayanya company made loans which decreased the The growth variable increase the return asset growth affected as plantation areas alim dan Yadav (2012) ROE, as one size not aligned with the companies such as low would result in increased and Suhail (2013) of the companies, always recieve positive smaller profit rates assets could be used 2017 asset turn over of less used to measure the efficiency of company assets for producing sales, indicating the inefficiencies of the management on those assers and the possible problem of only Sinarmas that had an efficient enough to manage its company assets, while other six companies were less efficient to manage their assets properly. However, on average rat, the palm oil companies gained a high profit from its profit margin, making it one of the companies included in the high margin industries.

MANAGERIAL IMPLICATIONS
The Company's Managerial Implications. The managerial implication for the companies' management was paying attention to world CPO price movements to predict sentiments that could affect CPO oil prices, such as country policies on imports, world trade policies regarding CPO demands, and monitored competitions from soybean oil and represed companies. Management could also pay attention to the condition of high inflation rates that could increase the company's raw material costs and reduce profitabilities, by minimizing operational efficiencies and more conservative capital structures. The result of the research would be a suggestion for companies to supervise the use of debts and manage the assets efficiently, since the companies did not optimise the use of their debts to improve the companies' performences or profits.
Investors. For the investors, this research could become a reference to a fundemental research in the palm oil sector. Investors could pay attention to the influence of the company external factors, such as the world CPO prices, meaning if there was a sentiment on the increase of the prices, the analysis should be used as a reference to invest, as it would affect the profitabilities of ROE for the companies. In addition, investors could also check the economic conditions before investing. For example, when the inflation rate was high, it would reduce the ROE, so it was advisable to delay their investments on the palm oil sector. Investors also needed to pay attention to the working capital structure of the company, before deciding on an investment in the palm oil industry, as companies with large debt levels would affect the level of profitabilities. Therefore, the research would be beneficial to the companies with rising asset growths, that would oftenly increase the companies' profitabilities.
Government. The government could pay attention to the sentiments on the influence of the world CPO oil prices, as a reference for oil palm companies in selling their products. So far, the Indonesian CPO industry was oriented to foreign price exchanges such as Rotterdam and Malaysia, which made it not being monitored by the government. Therefore, the government required its own reference to price index in determining the selling prices of CPO. This was intended to increase the bargaining power of domestic CPO industry players at both regional and global marketing levels, and the government could have a more credible reference prices and help control the commodity prices.

CONCLUSION AND SUGGESTIONS
The results of panel data regression analysis in this study showed that the independent external from variables consisting of world CPO prices, the Inflation Rate had an effect on the ROE. Companies must be able to predict sentiments that affected the world CPO prices, such as policies from importing countries and competition from vegetable oil producers. The inflation rate and exchange rate must also be considered to undertake the right policies to manage the companies' operations.
The internal factors in this study that affected the ROE were debt to total assets, growth and sizeThe company's internal factors in debt-level decision makings were measured by the ratio of debt to total assets, therefore the company must consider the benefits (tax shield) with its costs (interest expenses, provisions, and other costs related to loans). If a company made loans excessively until exceeded this limit, it would decrease the profitabilities. Companies also needed to manage theair assets because it would increase profitabilities, but large assets did not necessarily guarantee it because in the perspective of the palm oil industry, it could not properly manage the emerging trade-offs between the cost of debt and the profits generated from the debt, causing a decrease in the companies' profitabilities.
The R-square study produced only 65 percent for the independent variables on ROE. Meanwhile, the sis was explained by other variables. The suggestion was that this study could be used as a reference for conducting researches in other sectors or by adding measurements to independent variables, especially from internal companies. Given that the influence of the world CPO prices, that greatly affected the ROE of oil palm companies, the research was also recommended to predict the impact of palm oil export policies to the European Union, in which the operations will be creduce by 2020 for oil palm companies in Indonesia.