Coronavirus Update

R.E.A Holdings Plc - Half-Year Results

 

 

R.E.A. HOLDINGS PLC (the "company")

 

HALF YEARLY REPORT 2019

 

Despite continuing good production, the financial results for the six months to 30 June 2019 were severely depressed by weak CPO and CPKO prices. With FFB production for the full year expected to be at record levels for the second year running, recent cost reduction initiatives and CPO prices rising as surplus stocks are absorbed globally, results for the second half of 2019 should show a material improvement.

 

 

HIGHLIGHTS

 

Financial

  • Average selling prices (FOB Samarinda) 22 per cent lower for CPO at $430 per tonne (2018: $549 per tonne) and 40 per cent lower for CPKO at $590 per tonne (2018: $977 per tonne)
  • Revenue up 17 per cent to $56.6 million (2018: $48.2 million), re?ecting in part the sale of excess inventory carried forward at the end of 2018 - had prices remained at 2018 levels, revenue would have been $72.5 million in the ?rst half
  • Underlying operating costs in the ?rst half of 2019 in line with 2018, although cost of sales of $63.2 million (2018:$42.8 million) distorted by stock movements, re?ecting the temporary stock build up due to logistical problems in the comparative period in 2018
  • Pre-tax loss of $29.5 million (2018: profit of $1.3 million), due to the impact of depressed CPO and CPKO prices exacerbated by the strengthening of the Indonesian rupiah against the dollar, which resulted in a negative $16.0 million foreign exchange swing

 

Agricultural operations

  • FFB production increased 3 per cent to 335,177 tonnes (2018: 324,955 tonnes) in the period
  • Increase in third party FFB purchased to 94,680 tonnes (2018: 80,463 tonnes)
  • CPO extraction rates consistent in the ?rst half of the year averaging 22.9 per cent (2018: 22.8 per cent)
  • Capital expenditure focused on mill works and maintaining existing plantings

 

Coal operations

  • Good progress as IPA expects to recommence mining at its Kota Bangun concession in the near future by appointing a contractor who will also manage the port facility
  • The contractor will fund all further expenditure required for infrastructure, land compensation and mobilisation in exchange for a participation in the pro?ts from the mine

 

Outlook

  • CPO prices expected to increase further as global demand for vegetable oils increasingly outstrips supply
  • Resumption of planting of the group's undeveloped land bank remains on hold pending a sustained recovery in the CPO price and a stronger financial performance
  • Recent cost reduction and improved ef?ciency measures, including workforce reductions, across the operations and support departments, expected to achieve some savings in the second half of 2019 notwithstanding associated one-off costs and, additionally, savings of not less than $10 million per annum from 2020 onwards