26th Aug 2015 08:58
LONDON (Alliance News) - REA Holdings PLC on Wednesday said is pretax profit in the first half was dragged substantially lower by weaker crude palm oil prices and lower crop levels and said the second half will be focused primarily on cutting its costs.
The company, which produces palm oil in Indonesia, said its pretax profit for the six months to the end of June was down to USD1.4 million, sharply lower than the USD17.1 million it made a year earlier.
Revenue for the group fell to USD46.2 million from USD66.4 million, but this fall was not offset by any reduction in its cost of sales, which were broadly flat and a fall in administrative expenses only mitigated the issues to a small extent.
REA said the fall in revenue was primarily down to lower prices for crude palm oil and crude palm kernel oil in the half, though lower crop production also hit sales. The company's oil palm fresh fruit bunches crop fell to 280,035 tonnes in the half, down from 309,801 tonnes a year earlier, in line with the lower cropping trends in the East Kalimantan region of Indonesia in the period.
REA said its focus in the second half will be on cost-cutting, which it hopes will be boosted by the continuing weakness of the Indonesian rupiah, which should reduce its local costs in dollar terms.
The group added that its expansion planting programme is on track.
Shares in REA were down 7.2% to 260.00 pence on Wednesday.
By Sam Unsted; [email protected]; @SamUAtAlliance
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