REG-R.E.A. Holdings plc R.E.A. Holdings plc: Trading Update

R E A HoldingsAnnouncement

11/06/2020 07:00

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   R.E.A. Holdings plc (RE.)
   R.E.A. Holdings plc: Trading Update

   11-Jun-2020 / 07:00 GMT/BST
   Dissemination of a Regulatory Announcement that contains inside
   information according to REGULATION (EU) No 596/2014 (MAR), transmitted by
   EQS Group.
   The issuer is solely responsible for the content of this announcement.

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   R.E.A. Holdings plc ("REA" or the "company") - Trading update

    

   Key agricultural statistics for the year to 31 May 2020 (with comparative
   figures for 2019) were as follows:

                                     2020    2019
   FFB crops (tonnes):                           
   Group harvested                295,000 275,000
   Third party harvested           75,000  78,000
   Total                          370,000 353,000
                                                 
   Production (tonnes):                          
   Total FFB processed            362,000 346,000
   CPO                             83,400  79,300
   Palm kernels                    18,000  15,400
   CPKO                             5,400   4,500
                                                 
   Extraction rates (percentage):                
   CPO                               23.1    22.9
   Palm kernel                        5.0     4.5
   CPKO*                             39.8    40.0
                                                 
   Rainfall (mm):                                
   Average across the estates       1,300   1,664

    

   * Based on kernels processed

    

   Covid-19 has not so far had a significant negative effect on the
   operations as agriculture is treated as a priority industry in Indonesia
   and, therefore, is explicitly excluded from lockdown measures. To date
   there have been only two confirmed cases of Covid-19 on the group's
   estates.

    

   As noted in the annual report for the year ended 31 December 2019,
   published on 7 May 2020, production in the first few months of the year
   has been at good levels.  With many harvesters unable to travel home for
   the traditional Ramadan holiday, productivity has been maintained during
   this period.  Despite the persistently weak CPO prices throughout most of
   2019, the group maintained fertiliser applications at normal levels and
   aims to do so again for 2020.

    

   The group continues to push for improvements in loose fruit collection,
   greater efficiency of FFB transport to the mills for processing and
   tighter disciplines in the mills.  Driven by the recently restructured
   management team, the modifications, upgrading and rigorous maintenance
   programme across all three mills are progressing with a view to optimising
   extraction rates and ensuring that the design throughput in each mill is
   maintained.

    

   After a strong start to 2020, CPO prices CIF Rotterdam fell from $860 per
   tonne on 1 January to a low for the year to date of $510 per tonne in mid
   May.  Since then, there has been a moderate recovery to a current level
   $595 per tonne.  The Indonesian government continues to support the
   production of CPO based bio-diesel for internal use and this, coupled with
   continued CPO offtake by China and a reopening Indian market for CPO,
   should provide support to the CPO price.

    

   The average selling price for the group's CPO for the five months to the
   end of May 2020, on an FOB basis at the port of Samarinda, net of export
   levy and duty, was $540 per tonne (2019: $434 per tonne).  The average
   selling price for the group's CPKO, for the same period, was $650 per
   tonne (2019: $590 per tonne).

    

   Significant uncertainties still remain regarding the Covid-19 pandemic and
   its economic impact.  The directors are therefore continuing to adopt a
   cautious approach with expenditure being minimised throughout the group. 
   Some additional measures are being taken to reduce costs without
   compromising operational performance, including a headcount reduction of
   some 200 (mostly in the temporary workforce) since the beginning of the
   year as a further step in the cost saving programme initiated in 2019. 

    

   Following the previously reported conclusion of an agreement with a
   neighbouring coal company on quarrying the andesite stone concession, the
   coal company in question has commenced land clearing for the road that it
   is proposing to build through the group's estates utilising stone sourced
   at least in part from the concession.  This augurs well for commencement
   of stone production.  However, weakness in coal prices in the wake of the
   Covid-19 pandemic is likely to mean a further delay to the planned
   recommencement of coal production by the concession holding company, IPA.

    

   Over time, low levels of replanting and little new planting in Indonesia
   will result in slower production growth of CPO and CPKO boding well for
   future prices as demand increases and stocks diminish.  The directors,
   therefore, look forward to a more positive outlook as cash flows improve.

    

    

    

   Enquiries:

   R.E.A Holdings plc

   Tel: 020 7436 7877

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   ISIN:          GB0002349065
   Category Code: AGM
   TIDM:          RE.
   LEI Code:      213800YXL94R94RYG150
   Sequence No.:  69066
   EQS News ID:   1067779


    
   End of Announcement EQS News Service

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