LONDON (ShareCast) - (Sharecast News) - Indonesian palm oil producer MP Evans said in an update on Monday that crop and production increased again in 2022, as its oil palm estates continued to mature and yields rose.
The AIM-traded firm said that even after another year of increase, further production growth from its existing areas was still in the pipeline.

During 2022, the group achieved an average mill-gate price for its crude palm oil of $854 per tonne, up 5% year-on-year.

Prices for palm kernels averaged $611 per tonne at the mill gate, which was 15% higher than the $533 it achieved in 2021.

Crude palm oil pricing moderated somewhat in the second half from the "very high levels" seen in the first half, and moving into early 2023, the group said it recently achieved mill-gate prices of around $750 per tonne, which it said was "strong" compared to historic levels.

The company said it was committed to the production of "certified sustainable palm oil", and was close to completing its sixth palm-oil mill at the Musi Rawas project in South Sumatra.

It said the mill would process the increasing amount of crops being harvested from that estate.

The group also reported that it received total sustainability premia of $7.5m related to the sale of its certified sustainable output - 74% higher than the $4.3m received in 2021, which it said reflected a "strong increase" in premia available for sustainably-produced palm kernels.

Over 2022, the firm said it was "strongly" cash-generative, explaining that the remaining net debt at the start of the year of $5.4m was eliminated, and that even after ongoing capital investment, an increased dividend and restarting the share buyback programme, net cash stood at more than $30m by the end of the year.

That, the board said, supported its stated strategy of acquiring additional plantation land, with a number of potential acquisitions currently under review.

Considering the reported crop growth, the strong crude palm oil price environment observed in the year, and the ongoing cash generation, the directors said they remained "committed" to their policy to hold or increase the dividend, under which MP Evans had an "unbroken track record" of more than 30 years.

"The group has achieved another significant increase in crop processed which, in conjunction with the high price environment in the year, will form the basis for an excellent result," said executive chairman Peter Hadsley-Chaplin.

"We anticipate further crop increases from the Group's first-class estates and, with the Musi Rawas mill soon to be commissioned, we look forward to another productive and successful year in 2023."

At 1509 GMT, shares in MP Evans Group were up 3.9% at 852p.

Reporting by Josh White for Sharecast.com.

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