Anglo-Eastern Plantations Plc
(“AEP” or the “Group”)
Trading Statement
The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (“The Group”), is a major producer of palm oil and some rubber across Indonesia and Malaysia, amounting to some 128,200 hectares of which approximately 68,300 hectares (including Plasma) are planted, today announces a trading update in respect of the period since 31 December 2017.
Operational and financial performance
For the first three months ended 31 March 2018, our own production of fresh fruit bunches (“FFB”) was 232,400mt, an increase of 4% compared to the same period in 2017 (3M17: 223,900mt).Higher harvest in Riau and Kalimantan compensated for the lower production in North Sumatera plantations due to replanting exercises. FFB bought-in was 211,900mt, which represents a decrease of 12% as competition among new mills intensified in comparison with the same period in 2017 (3M17: 239,800mt). As a result the Crude Palm Oil (“CPO”) produced was 91,400mt, 3% lower than the corresponding period in 2017 (3M17: 94,200mt).
CPO price ex-Rotterdam averaged $672/mt for the first three months to 31 March 2018. This represents a decline of 13% from the average price of $774/mt recorded in the first quarter of 2017 and is below $678/mt at the start of 2018.
The Group's balance sheet remains strong with the Company continuing to generate positive cash flow. The Company's Long Term Development Loans totalled $25.9m as at 31 March 2018 (31 March 2017: $32.7m). The Group has net cash of $117.7m as at 31 March 2018.
Development
The Group's new planting for the three months ended 31 March 2018 totalled 240 hectares (including Plasma). Replanting of about 418 hectares of oil palm in North Sumatera will continue in the second quarter of 2018 and should be completed by the year end.
The biogas plant in Kalimantan is expected to commence commercial operation by third quarter of 2018 after installation of about 7 km of medium voltage transmission line.
Earthwork on the seventh mill in North Sumatera costing approximately U$19 million has started and should be completed by year end.
Outlook
The CPO price ex-Rotterdam started the year at $678/mt and reached a peak of $700/mt in the fourth week of February 2018. Since then it has trended downward and closed at $670/mt on 31 March 2018. The CPO price is forecasted to remain weak for the rest of the year due to concerns of oversupply of FFB production in Indonesia and Malaysia and pressure from larger production of competing oil.