M P Evans Share News (MPE)

(Sharecast News) - MP Evans updated the market on its trading on Friday, reporting that the Covid-19 pandemic has had "little effect" on its operations thus far.
The AIM-traded firm, which was holding its annual general meeting, said preventative measures were introduced to protect its employees, including putting the Jakarta office onto remote working, although all of its palm oil estates and mills had been working normally during the last three months.

It said the crop of oil-palm fresh fruit bunches for the five months ended 31 May totalled 275,900 tonnes from estates controlled by the group - around 16% higher than the same period in 2019.

Crops from the smallholder cooperatives associated with its new projects increased 17% to 70,300 tonnes.

Overall, the company said its crops were still on an upward trend, resulting from the young average age of its plantations, with yields increasing as they mature.

Crops were said to have grown "strongly" in the development at Musi Rawas, South Sumatra, and also at Bumi Mas in East Kalimantan.

At Bumi Mas, crops grew by 56% to reach 63,300 tonnes, while at Musi Rawas, starting from a lower base, crops increased from 4,200 last year to 13,000 tonnes in 2020.

In East Kalimantan and Bangka, crops were "a little above" and "a little below" the level of 2019, respectively, as both areas had experienced a mild dry spell.

Crops in both locations were expected to increase during the second half of the year, while in North Sumatra, crops were 10% higher than last year.

On the production front, MP Evans said it produced the equivalent of 106,000 tonnes of crude palm oil during the first five months of 2020, including 82,700 tonnes in its own mills, with the balance being the oil content of fresh fruit bunches sold by the group to third-party mills.

That represented a 35% increase compared with the equivalent period in 2019.

"The group continues to achieve a high oil-extraction rate of 23.6%, similar to the 23.7% achieved in 2019," the board said in its statement.

"An important contribution to production, notably in Bangka, was the continuing purchase of fresh fruit bunches from third parties, amounting to 115,200 tonnes, in addition to those produced on the group's own estates and scheme smallholders."

The firm said the average price of crude palm oil for the first five months of the year was $659 per tonne, "significantly higher" than the $533 per tonne recorded at the same time in 2019.

It put that down to a "strong start" to the year, before the emergence of Covid-19 bore down on prices.

In the period to the end of May, the company realised an average price at mill gate of $550 per tonne, compared with $475 per tonne in 2019.

Prices for palm kernels also weakened during 2020, averaging $310 per tonne at mill gate, but still higher than the $267 per tonne in 2019.

Since the middle of May, the crude palm oil price, while continuing to fluctuate, had strengthened to around $600.

"Thanks to the strength of its balance sheet and positive operating cash flows, the group has the financial resources to deliver its planned investment programme," the board said.

"Over the next three years, the group expects to commission new mills in Kota Bangun, Bumi Mas and Musi Rawas to maximise the oil obtained from its growing crop of fresh fruit bunches at the lowest cost.

"The increasing maturity of its planted areas and the application of high operating standards means the board is confident in its ability to deliver crop growth which is the foundation for improving results."

At 1300 BST, shares in MP Evans Group were up 6.96% at 599p.