6th Jun 2016 10:01
LONDON (Alliance News) - REA Holdings PLC on Monday said it believes it is "well on the way" to satisfying its medium-term funding requirements, and the recovery in crude palm oil prices, amongst other factors, augur well for its future value.
The palm oil and coal company operating in Indonesia said crude palm oil it produced for the first five months of 2016 totalled 56,000 tonnes, down from 62,000 the previous year.
In a statement ahead of its annual general meeting, REA Holdings said production had been "no exception" to the hit from 2015's El Nino weather phenomenon. However, it understands that the downturn in its production was "somewhat less than that" experienced by other crude palm oil producers in the East Kalimantan province of Indonesia.
REA has opted to increase fertiliser dosages, and is confident this will result in higher crop levels. Elsewhere, REA's recent refurbishment and maintenance in its mills, as well as a drive to improve the quality of fresh fruit bunches from smallholders and other estates, is contributing to a steady improvement in its extraction rates, its said.
REA said the recovery in the crude palm oil price in the last quarter of 2015 continued into 2016, with the price trading steadily upwards in the year to date.
Last month, REA reached a deal with PT Dharma Satya Nusantara Tbk for it to acquire a 15% stake in REA, in a deal which it said will bring REA new equity and loan capital of nearly USD50 million in total. It plans to use this to continue its extension planting programme. REA also is in talks with its Indonesian bankers to reorganise its local bank facilities to a basis that is better aligned with its projected free cash flow going forward.
Shares in REA were untraded Monday morning. They last closed at 269.50 pence.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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