The National, Friday 24th August 2012
By MALUM NALU
New Britain Palm Oil Ltd (NBPOL) yesterday announced “disappointing” earnings of US$72 million for the first-half of this year, down 9.4% at US$366 million, from US$403.9 million the year before.
Shares in NBPOL plunged to their lowest levels in two years after the impact of heavy rain slashed earnings by 61%.
In London, NBPOL shares tumbled 21% to close at 655 pence, wiping some £250 million from its stock market value.
Nick Thompson, chief executive officer, said the group’s results for the first half of this year were disappointing compared with the first-half of last year.
“The decrease in profitability is due to a number of significant contributing factors and we have prepared a variance analysis in this announcement to separately identify and discuss these factors,” he said in the half-yearly report to the Port Moresby and London stock exchanges,
“Some of the larger variances were out of our control such as the PKO (palm kernel oil) price while others such as margin pressure from the significant increase in the currency appreciation will be addressed through management cost saving initiatives.
“Operationally, we expect FFB (fresh fruit bunches) production and oil extraction rates to normalise next year.
“In the first-half of 2012, the group processed 1,223,179 tonnes of FFB, 5.6% lower than the same period last year due to extremely high rainfall across all of our operating sites but particularly in West New Britain, our largest production base, where we processed 13.8% less FFB year on year.
“Rainfall in West New Britain was 48% higher in this period compared to the first half of 2011 – 2.59m versus 1.75m – inhibiting our workers’ ability to collect and transport FFB.
“Such high rainfall also results in the fruit absorbing more water, thereby reducing extraction rates at our mills.”
“The group’s crude palm oil extraction rate for the first-half was 22.3% compared to the same period last year of 23.0% and the full year 2011 of 22.8%.
“The impact of lower FFB being processed coupled with lower extraction rates have resulted in total oils produced in the first-half of 2012 falling by 26,438 tonnes compared to the same period last year.”
Thompson said the lower FFB production was certainly not a biological issue in the oil palm trees as evidenced by the fact that NBPOL operations at the Kula Palm Oil Ltd (KPOL) sites (Higaturu, Milne Bay and Poliamba); at Ramu Agri Industries Ltd (RAIL); and at Guadalcanal Plains Palm Oil Ltd (GPPOL) in Solomon Islands processed a combined 6.1% increase in FFB production year on year.
“In addition, we have during July and August clawed back some of the FFB shortfall at West New Britain following improved weather conditions although extraction rates continue to come under pressure from the carryover effect of the preceding months.
“We, therefore, expect to return to normalised production and extraction rates in 2013 barring any adverse weather events.”