A perfect storm of low palm-oil prices and poor weather conditions stunted growth at New Britain Palm Oil (NBPO) last year, but it looks as if shareholders will reap better returns in 2014.
As world palm-oil prices declined, the average selling price New Britain secured for its oil last year fell 17 per cent to $898 a tonne. A further problem was the appalling weather, which dampened yields and sent crop volumes down 8 per cent and extraction rates down 7 per cent. This drained $99m of revenue from palm-product sales and led to a 79 per cent decline in underlying pre-tax profit to $17.3m (£10.3m).
But infrastructure improvements mean New Britain is now better placed to cope with adverse weather conditions, while costs were slashed by $35m. The group doubled capacity at its Liverpool refinery, entered into a supply agreement with Olenex and signed a separate joint-venture deal to develop high-yielding hybrid oil palms. Investment in in-house technical support for customers saw 13 new bakery products developed, helping to secure new business. Palm oil prices are rising again, too. Forward sales for New Britain's 2014 crude palm-oil production are priced at roughly $933 a tonne.
Panmure Gordon has upgraded EPS forecasts for 2014 by 20 per cent to 41.1¢.
| NEW BRITAIN PALM OIL (NBPO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 392p | MARKET VALUE: | £588m | |
| TOUCH: | 380-405p | 12-MONTH HIGH: | 528p | LOW: 307p |
| DIVIDEND YIELD: | 1.5% | PE RATIO: | 20 | |
| NET ASSET VALUE: | 567¢* | NET DEBT: | 28% | |
| Year to 29 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2009 | 324 | 200 | 95.3 | 28 |
| 2010 | 461 | 377 | 171.0 | nil |
| 2011 | 780 | 59 | 52.8 | 30 |
| 2012 | 677 | 4 | 0.4 | 15 |
| 2013** | 559 | 71 | 31.9 | 10 |
| % change | -17 | +1511 | +7875 | -33 |
Ex-div: na Payment: na £1=$1.67 **Half-year dividend only *Includes intangible assets of $47.1m or 31¢ a share | ||||
