Coronavirus Update

M.P. Evans Plc - 2020 First half trading update

The Group is pleased to announce the following crop and production information for the six months ended 30 June 2020:

 

2020

Increase

2019

 

Tonnes

%

Tonnes

Crop of fresh fruit bunches

 

 

 

Own crop

334,100

16

287,200

Scheme smallholder crop

84,600

16

72,900

Independent smallholder crop

130,900

157

50,900

 

549,600

34

411,000

 

 

 

 

Production*

 

 

 

Crude palm oil

124,800

31

95,000

Palm kernels

27,800

28

21,800

* Figures include production from the Group's crop sold to third-party mills.


Crop and production figures continued to rise during the first half of 2020. This results from increasing yields in the Group's areas as its palms mature. Palms' yields improve through their early years, and the Group has a low average palm age of only a little over seven years. In addition, the Group is harvesting a larger area as plantings on its newer estates come into harvesting for the first time. All estates and mills have continued to work normally during the Covid-19 pandemic.

In the period to the end of June 2020, the Group realised an average price at mill gate of US$541 per tonne compared with US$462 per tonne in the first half of 2019, an increase of 17%. Prices for palm kernels averaged US$298 per tonne (mill gate), higher than the US$263 per tonne in 2019.   After a strong start to the year, the price of crude palm oil fell as the global Covid-19 pandemic took hold to reach a low point of US$510 per tonne cif Rotterdam in the middle of May. Since then the price has recovered on an upward trend to reach more than US$650 by the middle of July. Futures markets point towards prices at above this level for the remainder of the year and into 2021, but may experience some variability whilst the Covid-19 crisis persists.

Following the end of the first half, as announced on 20 July 2020, the Group signed an agreement to dispose of 70 hectares of land in Malaysia for US$23.5 million, in line with the valuation published in its 2019 annual report. The proceeds will support investment in its Indonesian oil-palm projects.

In light of the reported crop growth and strengthening CPO price, the board anticipates that the Group will be in a position to maintain its dividend.