17th Apr 2025 13:11
(Alliance News) - REA Holdings PLC on Thursday reported a swing to profit during 2024 as a result of reduced expenses and higher prices, though noted a decrease in production amid dry weather.
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 it swung to a pretax profit of USD38.9 million from a loss of USD29.2 million in 2023.
This was driven by higher selling prices, which "more than offset the lower than expected production volumes that were reportedly widespread across the palm oil industry in Indonesia" according to Chair David Blackett.
Higher average selling prices, net of export duty and levy, amounted to USD819 per tonne for the year, up 14% from USD718 per tonne the year before. Crude palm kernel oil prices increased 46% to USD1,094 per tonne from USD749.
Revenue grew 6.3% to USD187.9 million from USD176.7 million, while cost of sales was reduced by 4.1% to USD136.5 million from USD142.4 million.
Distribution costs decreased 13% to USD1.3 million from USD1.5 million, and administrative expenses also fell 13% to USD15.2 million from USD17.4 million.
"Good progress was made throughout 2024 in bringing both the stone and sand operations to commercial production, although some permitting delays meant that their contribution to the group’s financial results for the year was immaterial. Both operations, however, should start to make meaningful contributions in 2025," said REA.
Crude palm oil production for the year totalled 190,235 tonnes, down 9.4% from 209,994 tonnes in 2023, as the amount of fresh fruit bunches harvested was 10% lower at 682,522 tonnes from 762,260 tonnes.
The lower harvest reflected "the widespread impact of drier weather conditions and reduced group hectarage due to the replanting programme", REA explained.
Crude palm kernel oil production was down 6.7% at 18,086 tonnes from 19,393 tonnes, while palm kernel declined 6.4% to 44,286 tonnes from 47,324 tonnes.
Looking ahead, REA expects operational performance to benefit from "continuing improvements to productivity and progressively increasing crops from currently immature areas reaching maturity".
"With liquidity improved, certainty as to the group’s ability to retire the sterling notes, a stable outlook for CPO and CPKO prices, and operational performance benefitting from the substantial investments in infrastructure and factories in recent years allowing levels of capital expenditure to normalise, the group expects that its financial position will continue to strengthen," Chair Blackett said.
"With financing costs continuing to reduce as net debt falls, the plantation operations should generate cash flows at good levels," he continued. "With stone production expected to provide a valuable addition to 2025 results and a positive contribution from the sand mining operations also likely to follow, the prospects for the group are encouraging."
Shares in REA were up 4.9% at 69.75 pence each in London on Thursday afternoon, giving it a market capitalisation of GBP30.5 million.
By Emily Parsons, Alliance News reporter
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