20th Aug 2019 17:47
(Alliance News) - Anglo-Eastern Plantations PLC on Tuesday posted a very sharp profit drop in the first half of the year due to falling crude palm oil prices.
The palm oil and rubber producer, which has plantations in Indonesia and Malaysia, reported a USD1.6 million pretax profit for the six months ended June 30 - a fraction of its USD22.0 million profit the year before.
This pretax profit figure includes a positive biological assets movement of USD1.8 million, down from USD332,000 year-on-year. Excluding this movement, Anglo-Eastern Plantations swung to a USD245,000 loss from a USD21.7 million profit.
Revenue dropped 27% to USD97.9 million from USD133.3 million as the company's gross profit margin dropped to 5.4% from 19% on declining crude palm oil, palm kernel, and rubber prices. Higher operational costs as well as a rise in newly matured areas also squeezed the margin.
Fresh fruit bunches production was down at 470,300 million tonnes from 477,400 million tonnes.
Chair Lim Siew Kim said: "The group expects [crude palm oil] prices to remain subdued due to likely higher output and inventories across the market in the second half of 2019. Analysts also highlighted the spread between CPO futures and spot prices has narrowed over the past months signalling the market's negative sentiments on CPO prices going forward. We expect production volumes in the second half of the year to improve."
Shares in Anglo-Eastern Plantations closed up 1.6% at 465.00 pence on Tuesday.
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