R.E.A. Holdings plc (RE.)
R.E.A. Holdings plc: Trading Update
11-Jun-2020 / 07:00 GMT/BST
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according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group.
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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
ISIN: GB0002349065
Category Code: AGM
TIDM: RE.
LEI Code: 213800YXL94R94RYG150
Sequence No.: 69066
EQS News ID: 1067779
End of Announcement EQS News Service
(END) Dow Jones Newswires
June 11, 2020 02:00 ET (06:00 GMT)
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