Rains and currency effects hit New Britain

Persistent rains hampered the harvest at New Britain’s biggest production site in Papua New Guinea. This increased costs, and resulted in 148,000 fewer tonnes of fruit bunches being processed, which led to an 8 per cent decline in total oil production to 545,207 tonnes. Crude palm oil (CPO) prices were volatile throughout last year with a peak-to-trough range of $770-$1,195 (£510-£791) a tonne, so a fall of just 4 per cent in New Britain’s average price for CPO could be seen as relatively modest. However, average prices achieved for palm kernel oil were down by a quarter, and though the segment only accounts for 10 per cent of total oil production, it had a "significant impact" on performance. All told, group revenues from palm products were $138m lower than in 2011, although New Britain did manage to drive sugar sales by 9.6 per cent to $55.8m.

Group operating profits shrank by 70 per cent year-on-year to $14.9m, although the contraction is even more pronounced if you discount the effects of fair-value changes and one-off gains. The appreciation of the PNG Kina against the US dollar pushed up costs for local wages and services, and fed through into a collapse in the gross margin to 36.6 per cent (down from 50 per cent in 2011).

VSA Capital anticipate adjusted 2013 EPS of 27.98¢, subject to review post results.