REG - Anglo-Eastern Plant - Trading Statement

Anglo-Eastern PlantationsAnnouncement

06/11/2023 07:00

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RNS Number : 4140S  Anglo-Eastern Plantations PLC  06 November 2023

6 November 2023

 

 

Anglo-Eastern Plantations Plc

("AEP" or the "Company")

 

Trading Statement

 

Anglo-Eastern Plantations Plc, a major producer of palm oil and some rubber
across Indonesia and Malaysia, today announces a trading update covering the
nine months to 30 September 2023.

 

 

Operational and financial performance

 

For the first nine months ended 30 September 2023, our own production of fresh
fruit bunches ("FFB") from continuing operations was 841,960mt, a decrease of
2% compared to the same period in 2022 (9M22: 859,900mt). Over the last two
years, 2,370 hectares of old palms had been felled in Bengkulu and North
Sumatera with 1,100 hectares replanted in 2022 and another 869 hectares
replanted for the first nine months of 2023 resulting in the decline in FFB
production. FFB production from discontinued operations in South Sumatera in
2023 was 21,580mt (9M22: 37,000mt). FFB bought-in was 805,030mt, a decrease of
5% in comparison with the same period in 2022 (9M22: 845,850mt). The drop in
external crop purchases was primarily driven by intense competition for
external crops in Riau and lower crop trend in Bengkulu. Total Crude Palm Oil
("CPO") produced was 338,840mt, a decrease of 4% compared to the corresponding
period in 2022 (9M22: 351,460mt) due to lower FFB supplied from both our own
estates and bought-in crops.

 

CPO price ex-Rotterdam averaged $983/mt for the first nine months of 2023.
This represents a significant decrease of 33% from the average price of
$1,471/mt recorded in the corresponding period in 2022. Prices remain volatile
as CPO price ex-Rotterdam closed at $920/mt on 18 October 2023 compared to
$1,060/mt at the start of the year. Our Group's average ex-mill price for CPO
for the first nine months of the year was also lower by 19% at $729/mt (9M22:
$896/mt). The Group also experienced a decrease in palm kernel price which was
on average lower by 46% at $342/mt against $635/mt last year. Lower CPO prices
were attributed to higher inventory of vegetable oils and the abundance of
cheap sunflower oils from Russia and Ukraine, as these two top producers took
advantage of their depreciated currency to grab larger share of the edible
oils market.

 

The Group's balance sheet remains strong with no outstanding bank loans. The
Group had net cash of $226.1m at 30 September 2023 (3Q22: $252.6m). The
reduction in the cash balance takes into account the acquisition and
consolidation of AEP's holding in two Indonesian subsidiaries for $25.2m, as
announced on 12 July 2023, $5.9m remitted in advance to the Company's
Registrar for interim dividends payable on 6 October 2023 and a $4.1m remitted
to the Company's broker for its irrevocable commitment to purchase its
Ordinary Shares, as announced on 24 August 2023. During this period, the Board
also approved an investment of $10m into some short-term capital protected
securities for a better yield.

 

 

Development

 

The Group's total landholding from its continuing operations comprises some
90,667 hectares of which the planted area stands at around 68,414 hectares.
The Group's new planting and replanting for the nine months ended 30 September
2023 totalled 1,452 hectares (including Plasma) against 1,367 hectares for the
corresponding period last year. Plasma planting for the period was 126
hectares (9M22: 201 hectares). New planting in Kalimantan was temporary halted
due to the extreme dry conditions in the last two months.

 

As previously announced, on 5 July 2023, the Group has completed the disposal
of the three loss-making South Sumatera estates. The affected employees were
retrenched, closely supervised by the local labour department and witnessed by
representatives from the labour unions. The new owner has officially taken
over the operations of these plantations.

 

The BioCNG plant in North Sumatera is nearing completion with some piping
works remaining. Equipment are being tested with the possibility of commencing
production before the end of 2023.

 

The construction of the seventh mill in North Sumatera has been completed.
Test runs are being conducted processing small batches of in-house FFB to test
the equipment. The palm oil mill effluent is currently stored in open tanks
away from the work areas while final checks are being carried out to test the
recently repaired Anaerobic Tank Digesters for leakages. The bacteria in the
anaerobic effluent treatment plant will also need to be cultivated and
build-up before the whole system is fully functional. The mill is expected to
start buying external crop for processing by the first quarter of 2024.

 

There is, however, little progress on the construction of the eighth mill in
Kalimantan as we await the relevant government authorities to approve the
environmental impact assessment study before commencing the earthworks.

 

 

Outlook

CPO prices are expected to be weak for the remaining part of the year as the
industry enters   traditional period of more robust crop production. The
reported high palm oil inventory, together with the abundance of other
competitive vegetable oils, coupled with a lower demand from the major
importers are likely to suppress any upward movement in CPO prices for the
last quarter of 2023.

 

 

 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

 

Note: The information communicated in this announcement is inside information
for the purposes of Article 7 of Market Abuse Regulation 596/2014 as it forms
part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018.

 

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