30th Apr 2015 12:14
LONDON (Alliance News) - Anglo-Eastern Plantations PLC Thursday reported a big drop in profit in 2014 despite an increase in revenue, due to a biological asset value adjustment, and warned of a challenging future as crude palm oil prices remain under pressure due to lower prices for alternatives like crude oil and soya and sunflower oil and because input costs are rising.
The palm oil and rubber producer reported a 67% drop in pretax profit to USD51.2 million, from USD153.4 million in 2013, despite a 24% rise in revenue to USD251.3 million from USD201.9 million on the back of higher production of fresh fruit bunches. The profit drop was caused by a biological asset adjustment of USD33.7 million, compared with a credit of USD93.7 million in 2013, mainly due to the weakening of the Rupiah against the US dollar. Excluding this adjustment, its profit rose to USD85.0 million, from USD59.7 million.
Anglo-Eastern warned of challenging times ahead for the group and the palm oil industry. It noted that while India's imports of edible oil rose for the third year in a row, the import of palm oil fell for the first time in four years as Indian refiners bought more soy and sunflower oil as the price differential between the products narrowed.
Increased planting acreage complemented by good weather led to a bumper harvest of soybean and record supply of cooking oil globally, it said, adding that exports of crude palm oil from Indonesia and Malaysia to the two largest consumers India and China, were lower as the crude palm oil discount to soya oil narrowed to around USD100 per metric tonne compared with a 10-year average discount of USD160 a tonne. China also cut back on shipments of crude palm oil amidst a slower economy and tightening of lending for commodity financing, Anglo-Eastern said.
However, the company said the mill construction in Central Kalimantan is progressing on schedule and said it is expected to be operational in the second quarter of 2015, while the USD5 million construction of the biogas and biomass plant in North Sumatera is now complete and has begun operations.
Anglo-Eastern said it will pay a dividend of 3 pence for the full year, the same it paid in 2013.
"The board views the prospects for 2015 with cautious optimism. It was reported that the import for oils and fats has been growing at an average of 2.2 million metric tonnes per annum over the last 3 years. The continuing rise in income levels and population growth in China, India and Indonesia would be expected to drive the consumption of CPO and likely lead to a gradual recovery in CPO prices. The possibility of price recovery over the next few months is limited due to an ample supply of vegetable oils coming onto the market. Weaker currencies in Malaysia and Indonesia which makes CPO cheaper may perhaps stimulate the purchase by foreign refiners," Chairman Lim Siew Kim said in a statement.
"The group expects to face tougher challenges with steeper rise in operating costs in 2015 due to rising fertiliser prices, higher wage inflation and removal of government fuel subsidies in Indonesia," the chairman added.
Shares in Anglo-Eastern were trading up 1.7% at 598.00 pence Thursday afternoon.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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