19th Jun 2025 13:27
(Alliance News) - REA Holdings PLC shares climbed on Thursday as it said overall production in the first five months of the year was "slightly ahead" of the previous year.
The London-based company, which is engaged in palm oil cultivation in Indonesia as well as in producing crude palm and palm kernel oil, said total fresh fruit bunch crops were up 5.2% to 354,661 tonnes in the five months to the end of May from 337,164 tonnes a year ago.
Shares in REA were up 7.6% to 84.75 pence in London on Thursday afternoon.
Total fresh fruit bunches processed climbed 4.7% to 359,215 tonnes from 342,993 tonnes.
Crude palm oil production was 3.7% higher at 76,092 tonnes compared to 76,243 tonnes. Palm kernel production grew 6.3% to 18,679 tonnes from 17,566 tonnes.
The firm said overall production grew, notwithstanding that the current year crop is coming from a mature area that has been reduced by the replanting programme and "exceptionally high" levels of rain in the first four months of the year.
REA said rainfall to the end of May was 54% higher than in 2024 and 22% above the 10-year historic average.
"Although such high rainfall created challenges for timely evacuation, the recent investments in road stoning meant that the group was better able to cope with these challenges than in the past. Nevertheless, there was some impact on fruit quality with consequent pressure on extraction rates," REA said.
The company said crude palm oil prices have stayed about USD1,000 in the first five months of 2025, trading between USD1,365 and USD1060.
It said supplies remain tight and are expected to remain so as Indonesia pushes increased use of biodiesel in transport fuel. It said there is a "reasonable prospect" that prices will be sustained at "good levels" for the rest of the year.
REA said it expects its financial position to continue to strengthen.
"Financing costs should further reduce as net debt falls and the plantation operations should generate cash flows at good levels. Stone is expected to start providing a valuable addition to cash flow and profits and positive contributions from the sand mining operations are likely to follow. The prospects for the group are therefore encouraging," the company said.
Its half-year results will be published in the second half of September.
By Michael Hennessey, Alliance News reporter
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