Palm Oil and Cattle Group, MP Evans, Upbeat on Palm Oil Industry Prospects
Despite prices falling to their lowest since 2007, palm oil and cattle group, MP Evans is bullish on the prospects for the palm oil industry based on the potential for strengthening demand as Indonesia intends to raise its domestic biofuel blending rate for diesel to 10%.
The group has 24,100 hectares of oil palm planted in Indonesia, and harvested 385,400 tons of palm fruit bunches last year. Despite acknowledgement that palm oil prices have fallen 19% year on year as of April 14, the group is planting an additional 9,000 hectares, and is seeking out additional land suitable for palm oil expansion in the same region as its existing operations in Sumatra.
With its 2014 crop up 12%, MP Evans’ palm oil division’s 2014 profitability increased 44% year on year over 2013 levels, to $35.8 million as new tree stocks came into maturity on the group’s Kalimantan and Banka estates. Looking forward, the group expects increased production from its palm oil division in 2015 and ensuing years.
Overall, the group’s 2014 profits were up 62%, reaching $37.1 million, with revenues up 10.6% to $90.9 million, driven by profits in its Australian cattle holdings, Woodland and NAPCo, and its Malaysian properties. The group plans to capitalize on the success of these assets, signaling its willingness to divest itself of the properties and exit Malaysia altogether, in order to raise capital to fund the development of its Indonesian holdings.