New Britain Palm Oil Limited (NBPO), one of the world's largest fully integrated producers of sustainable palm oil, has announced its unaudited interim results for the six months ended 30 June 2014.
Revenue increased by 9.5% to USD 337.9 million (H1 2013: USD 308.6 million). Profit before tax increased by 454.6% to USD 78.2 million (H1 2013: USD 14.1 million) excluding the effects of revaluing biological assets under IAS 41. Basic EPS increased by 784.1% to USD 38.9 cents per share (H1 2013: USD 4.4 cents per share) excluding the effects of revaluing biological assets under IAS 41. EBITDA, excluding the effects of revaluing biological assets under IAS 41, of USD 115.8 million (H1 2013: USD 54.2 million). EBITDA, excluding the effects of revaluing biological assets and net foreign exchange gains/(losses), of USD 112.8 million (H1 2013: USD 68.4 million). Gross margin of 42.2% (H1 2013: 32.8%) reflecting higher selling prices coupled with cash cost reductions and the depreciation of the Papua New Guinea Kina against the US Dollar. Net debt at 30 June 2014 of USD 264.0 million (31 December 2013: USD 241.7 million). Subsequent to the period end, an interim dividend for 2014 of USD 15 cents per share was declared payable on 21 November 2014.
During the first half of 2014, a record total of 1,303,383 tonnes of Fresh Fruit Bunches (FFB) were processed (H1 2013: 1,160,499 tonnes), including 361,437 tonnes from smallholders (H1 2013: 329,874 tonnes). Total oil production in the period was a record 319,853 tonnes (H1 2013: 279,978 tonnes), with 290,514 tonnes of Crude Palm Oil (CPO) and 29,339 tonnes of Palm Kernel Oil (PKO) (H1 2013: 254,633 tonnes and 25,345 tonnes respectively). As at 30 June 2014, the Group had shipped 295,341 tonnes of all oils at USD 986/tonne (H1 2013: 284,552 tonnes at USD 907/tonne). The Group's crude palm oil extraction rate for the period was 22.29% (FY 2013: 22.15%). The Group’s palm product extraction rate for the period was 27.91% (FY 2013: 27.50%). The company’s Liverpool refinery continues to grow sales volumes in both the bulk and bakery sectors with a record level of fully traceable and certified sustainable palm oil delivered to customers in the first half
Commenting on the results, Mr Nick Thompson, Chief Executive Officer, said: “The Group’s operational performance for the first half of 2014 was very strong with record production of FFB and total oils which, together with better extraction rates, higher selling prices achieved and lower costs of production, resulted in a profit before tax of USD 73.1 million excluding unrealised non-cash foreign exchange gains.”
In the first half of 2014, the Group processed 1,303,383 tonnes of FFB, some 12.3% higher than the same period last year, including 361,437 tonnes from smallholders (2013: 329,874 tonnes). CPO extraction rates during the period averaged 22.29%, as compared to the corresponding period in 2013 of 21.95%. As a result of higher FFB production and higher extraction rates, 290,514 tonnes of CPO was produced, some 14.1% higher than the same period last year. Palm Kernel Oil (“PKO”) production was 29,339 tonnes, some 15.8% higher than the same period last year.
The lower PNG Kina during the period continued to mitigate some of the cost pressure on our domestic wages and locally consumed services in US Dollar terms. However, in early June the Central Bank of PNG instructed foreign exchange dealers in PNG to quote the USD-PNG Kina exchange rate within 75 basis points either side of the official reference rate (being 0.4130). This effectively increased the value of the PNG Kina by circa 18% from its low of 0.3500 in May. This has resulted in net currency gains of USD 3.0 million in the first half as compared to losses of USD 14.2 million in the same period last year. These gains include USD 5.1 million of non-cash unrealised exchange gains on restatement of USD borrowings.
Palm oil prices during the period have been trading in a broad range between USD 830 and USD 990 per tonne. While the outlook for palm oil demand remains robust, the record supply of alternative vegetable oils has resulted in current prices trading at their lowest levels so far this year. It also appears less likely that an “El Niño” event will have a materially negative impact on global palm oil production, as was previously predicted by climate models. On a positive note, increasing local consumption in Malaysia and Indonesia and a strengthening of the global economy continue to be supportive for longer term pricing. In the context of current prices, we are pleased to have sold or priced forward approximately 81,000 tonnes of CPO for the remainder of 2014 at an average price of USD 908/tonne.”
