Picture of R E A Holdings logo

RE. R E A Holdings News Story

0.000.00%
gb flag iconLast trade - 00:00
Consumer DefensivesSpeculativeMicro CapTurnaround

REG-R.E.A. Holdings plc R.E.A. Holdings plc: Trading Statement <Origin Href="QuoteRef">REAH.L</Origin>

============

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

   31-Jan-2018 / 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.

   ══════════════════════════════════════════════════════════════════════════

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

    

   Trading update

    

   Highlights

    

     • Total FFB up 14 per cent in 2017 to 644,570 tonnes (2016: 566,423
       tonnes)
     • Group FFB up 13 per cent in 2017 to 530,565 tonnes (2016: 468,371
       tonnes)
     • Stronger extraction rates in second half of 2017: CPO at 23 per cent
       (first half 2017: 22 per cent) and CPKO at 39 per cent (first half
       2017: 37 per cent)
     • Negotiations around the divestment of certain outlying plantation
       assets progressing well with indicative proposals expected in February
     • Plans to reopen the coal concession at Kota Bangun progressing well,
       with anticipated acquisition of adjacent mine and associated permits
       expected to lead to subsequent sale of existing 16,000 tonne stockpile

    

   Agricultural operations

    

   Key agricultural statistics for the year to 31 December 2017 (with
   comparative figures for 2016) were as follows:

    

                                     2017    2016
   FFB crops (tonnes):                           
   Group harvested                530,565 468,371
   Third party harvested          114,005  98,052
   Total                          644,570 566,423
                                                 
   Production (tonnes):                          
   Total FFB processed            630,600 560,957
   CPO                            143,916 127,697
   Palm kernels                    29,122  26,371
   CPKO                            11,052   9,840
                                                 
   Extraction rates (percentage):                
   CPO                               22.8    22.8
   Palm kernel                        4.6     4.7
   CPKO                              38.0    34.7
                                                 
   Rainfall (mm):                                
   Average across the estates       3,620   3,449

    

   Production showed a marked improvement in 2017; the recovery which started
   in the middle of 2017 continued into the second half.  This is
   particularly encouraging following the harvesting and transportation
   difficulties experienced at the end of 2016 and into the first half of
   2017.  Cropping was up 18 per cent to 342,000 tonnes of FFB from 290,000
   tonnes of FFB in the first half, notwithstanding that the outcome for the
   last quarter of the year was more muted than had been envisaged.  This was
   partly because the remedial action required across the group's estates in
   both the field and infrastructure took longer than expected to complete
   and partly because of the number of harvesting days disrupted by rain
   during the traditional peak cropping period.

    

   Mill extraction rates also improved in the second half of the year,
   averaging consistently above 23 per cent for CPO and 39 per cent for CPKO,
   compared with 22 per cent and 37 per cent in the first half.

    

   Development work at PBJ was hampered by the weather conditions throughout
   2017 as extension planting, planned to occur predominantly in lower lying
   areas in the north west section, had to be postponed until consistently
   drier weather would permit bunding to control flooding to be completed. As
   weather conditions become more favourable and with certain land issues in
   respect of the remaining pockets of immediately plantable land in PBJ now
   resolved, clearing and planting of PBJ will accelerate over the coming
   months.

    

   Towards the end of 2017, the group conducted a review of the development
   programme for CDM.  As a consequence of this review, the planting of 1,000
   hectares originally planned in CDM has been cancelled in order to
   concentrate on larger, near contiguous blocks within this estate with a
   view to completing this development in the most cost-effective manner
   while at the same time protecting the important conservation reserves in
   the wetland area. 

    

   Delays in the PBJ planting and the review of the CDM development programme
   meant that the previously announced target of completing 3,000 hectares in
   PBJ and CDM combined in 2017 was not achieved.  The balance of the
   targeted 3,000 hectares has been carried over to 2018 and, following
   completion of this, extension planting in 2018 is now expected to be
   concentrated on PU and areas of PBJ2 contiguous with SYB. 

    

   Actual development in 2017 was as follows:

   Hectares                                      2017
   Cleared, not yet planted at 1 January 2017   1,581
   Cleared during the period                      780
   Cleared, not yet planted at end of period  (1,200)
   Planted during the period                    1,161

    

   Pricing

    

   The CPO price, CIF Rotterdam, had a strong start to the year rising from
   $790 per tonne at the beginning of January to $857 per tonne by the middle
   of the month on the back of generally lower production.  Thereafter, with
   stock levels increasing and expectations of significant production growth
   in the second half of the year, the price declined, reaching a low point
   of $645 at the end of June and ending the year at $670.  Prices are
   currently at $667.50 per tonne and expectations are that they will be
   stable around this level at least for the first half of 2018, as growing
   consumption in India and Asia continues to absorb the projected supply
   increases in the early months of the year.

    

   CPKO maintained high premia over CPO throughout 2017.  The price peaked at
   $1,860 per tonne, CIF Rotterdam, in late January, reflecting concerns at
   the continued inadequacy of supplies of coconut oil for which CPKO can be
   a substitute.  As concerns about supplies of alternatives abated, prices
   drifted down to end the year at $1,242 per tonne. They are currently
   stable at around this level, nearly double the price of CPO.

    

   Divestment

    

   Negotiations for the divestment of certain outlying plantation assets, as
   noted in the group's half yearly report in September 2017, are progressing
   well.  A number of potential purchasers have registered their interest and
   indicative proposals for the purchase of the assets concerned should be
   received in February.

    

   Stone and coal operations

    

   The limestone quarry adjacent to the group's PBJ property commenced
   operations in May 2017 delivering stone to the crushing facility that has
   been established on PBJ land.  Crushing operations commenced in September
   and crushed stone is now being used for road hardening in PBJ.  The
   balance of stone not required by PBJ will be sold to third parties.  

    

   The group has commenced discussions with a third party interested in
   establishing a joint venture to develop and operate the group's andesite
   stone concession.  The discussions are at an early stage, but it is
   contemplated that the third party would operate the quarry, market the
   crushed stone production and provide the development funding required in
   exchange for a share of future profits.

    

   Plans to reopen the coal concession at Kota Bangun are progressing well.
   The group expects shortly to complete the acquisition of an adjacent mine
   and the relicensing of the established loading point on the Mahakam River,
   together with a coal conveyor that crosses the group's concession and runs
   to the loading point.  This will permit completion of the sale of the
   existing coal stockpile at the concession of some 16,000 tonnes, followed
   by dewatering and recommencement of mining.

    

   Outlook and publication of results

    

   After a difficult two years, the group has made positive strides in
   turning round its operations.  Whilst it has taken time to address the
   consequences for field disciplines of a shortage of skilled harvesters and
   infrastructure deficiencies, the more robust and experienced estate
   management team now in place is working to restore the group's operations
   to their previous high standards. 

    

   Building on the stronger production in the second half of 2017, the
   directors remain optimistic about the outlook for the group in 2018 with
   FFB production expected to be materially ahead of the 530,000 tonnes in
   2017 and 468,000 tonnes in 2016.

    

   In line with the timetable adopted in previous years, it is expected that
   the final results for 2017 will be announced, and the annual report in
   respect of 2017 published, at the end of April 2018.

    

   Enquiries:

   R.E.A Holdings plc

   Tel: 020 7436 7877

   ══════════════════════════════════════════════════════════════════════════

   ISIN:          GB0002349065
   Category Code: TST
   TIDM:          RE.
   LEI Code:      213800YXL94R94RYG150
   Sequence No.:  5158


    
   End of Announcement EQS News Service

   ══════════════════════════════════════════════════════════════════════════

   649737  31-Jan-2018 

    1 fncls.ssp?fn=show_t_gif&application_id=649737&application_name=news&site_id=reuters6

References

   Visible links


============

Recent news on R E A Holdings

See all news