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(Sharecast News) - Indonesia-focussed palm oil producer MP Evans announced its unaudited interim results on Monday, reporting a 2% rise in the total crop processed, amounting to 721,100 tonnes.
The AIM-traded firm recorded a 3% escalation in the overall production of crude palm oil for the six months ended 30 June, reaching 166,200 tonnes.
However, the palm oil industry experienced fluctuations in price metrics, with the mill-gate crude palm oil price seeing a significant drop of 27% to $755 per tonne.
On the sustainability front, MP Evans reported a commendable 7% increase in its certified sustainable production, taking the figures up to 96,500 tonnes from 90,500 tonnes in 2022.
However, the group also experienced a surge in its operational expenses, with a notable 26% rise in the cost of group palm product, reaching $535 per tonne.
The board said the rise in costs, coupled with the reduction in crude palm oil prices, heavily impacted its company's profitability, leading to a 62% slide in operating profit to $23.4m.
That dip was mirrored in earnings per share as well, which decreased 61% year-on-year to 24.8p.
Despite the challenges, the group maintained its interim dividend per share at 12.5p, consistent with the 2022 figure.
Its net cash position decreased from $13.5m in 2022 to $2.5m at the end of June.
Since the end of the first half, MP Evans reported an upswing in cropping levels, with a total crop processed of 318,800 tonnes in the subsequent two months up to August.
Adding to the positive stride, the group also signed an agreement to acquire an additional 8,350 planted hectares in East Kalimantan - a move poised to bolster its existing milling operations.
"The group continues to increase output, notably from its own production facilities, following the commissioning of the Musi Rawas mill this February," said chairman Peter Hadsley-Chaplin.
"We are delighted to be reporting further strategic increases in planted hectarage, both at Simpang Kiri earlier this year, and the recently announced agreement to acquire over 8,000 planted hectares in East Kalimantan.
"These developments, along with increasing cropping levels, put the group in a strong position to deliver a productive and profitable 2023 and bodes well for its longer-term prosperity."
At 1031 BST, shares in MP Evans Group were down 3.07% at 742.48p.
Reporting by Josh White for Sharecast.com.
