Anglo-Eastern Plant - Trading Statement
26/05/2023 10:20
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RNS Number : 8250A Anglo-Eastern Plantations PLC 26 May 2023
26 May 2023
Anglo-Eastern Plantations Plc
("AEP", "Group" or "Company")
Trading Statement
The Group, which is a major producer of palm oil and to a lesser extent rubber
with plantations across Indonesia and Malaysia, amounting to approximately
128,000 hectares, today announces a trading update in respect of the first
quarter ended 31 March 2023.
Operational and financial performance
For the first three months ended 31 March 2023, our own production of fresh
fruit bunches ("FFB") from continuing operations was 243,500mt, a decrease of
6% compared to the same period in 2022 (3M22: 260,100mt). FFB production from
discontinued operations was 7,020mt against 8,610mt for the corresponding
period last year. Lower production trends were experienced in all regions
except for Bangka and Kalimantan. Rainfalls were close to normal except for
CPA in North Sumatera and Bengkulu where the rainfall recorded in March 2023
exceeded 520mm and 460mm respectively, disrupting harvesting activities.
The lower productions in Bengkulu and North Sumatera were due mainly to
seasonal variation and the reduction of matured areas as 1,581 hectares were
replanted from 2022 to the first quarter of 2023. FFB bought-in was also lower
at 204,700mt (3M22: 261,200mt), a decrease of 22%. All the AEP mills
experienced a drop in external crop purchases, except for the mill in
Kalimantan, in line with the lower crop trend and the intense competition for
external crops. As a result, crude palm oil ("CPO") production was lower by
14% at 92,600mt compared to 107,300mt for the same period last year.
The CPO price ex-Rotterdam averaged $1,016/mt for the first three months to 31
March 2023, a decrease of 36% from the average price of $1,592/mt recorded in
the first quarter of 2022 and was below $1,060/mt at the start of the year.
The ex-mill price, as a result, was lower by 27% at $763/mt compared to
$1,041/mt for the same period last year. Rising soft-oil stocks, declining
soybean oil prices and fragile demand on the back of inflationary pressure are
the likely reasons for the decline in CPO prices.
The Group's balance sheet remains strong with no outstanding bank loans. The
Group has net cash of $284.6 million as at 31 March 2023 compared to $252.5
million for the same period last year.
Development
AEP has plantations across Indonesia and Malaysia, amounting to approximately
90,700 hectares from continuing operations, of which approximately 68,350
hectares including plasma are planted. For discontinued operations, AEP has
37,300 hectares of plantations in which 7,750 hectares including plasma are
planted. New planting for the first three months ended 31 March 2023 was
higher at 202 hectares (3M22: 192 hectares) including plasma. Another 329
hectares were replanted in Bengkulu in the first three months of 2023.
On 9 May 2023, AEP announced an unfortunate incident at the HPP mill causing a
tragic loss of lives of four employees of the contractor. As a result, the
Group expects a delay in completion to the operational date for the newly
built, seventh mill in Indonesia, of approximately six months. The HPP
plantation's operation in the production of FFB is unaffected by this
incident, and the Group expects no financial impact as a result of this
incident of the delay.
The design works for the eighth mill in KAP in Kalimantan are being finalised.
The earthworks is scheduled to begin after approval of the necessary building
permits and environmental impact assessment. We are hopeful to start the
earthworks by the end of the third quarter of 2023.
Outlook
The CPO price ex-Rotterdam started the year at $1,060/mt. Since then, it has
trended downwards to close at $925/mt on 24 May 2023.
CPO's rare premium, of late, over its rival soft oils is likely to be
short-lived as Indonesia relaxes its rules on the domestic market obligation
("DMO") and allows more exports after the Eid holidays. Global palm supplies
were artificially tight as Indonesia imposed curbs on exports in March 2023 in
anticipation of higher local demand for cooking oil ahead of the festivities.
Rapeseed production has rebounded in Europe and Canada, whilst it has been
reported that Russia and Ukraine have been trying to liquidate their sunflower
seeds quickly putting further pressure on CPO prices. A pullback in CPO prices
is likely as crop production improves from the second half of the year.
There is also a likelihood of El-Nino weather phenomenon developing in the
second half of the year inducing drought and fire in some parts our
plantations thus affecting crop production and CPO prices.
For further enquiry, contact:
Anglo-Eastern Plantations Plc
Dato' John Lim Ewe
Chuan
+44 (0)20 7216 4621
Panmure Gordon (UK) Limited
Dominic Morley / Amrit Mahbubani
+44
(0)20 7886 2500
This announcement contains inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 as it forms part of UK domestic law by virtue of
the European Union (Withdrawal) Act 2018.
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