Lincoln Moore, Executive Director of DekelOil (AIM:DKL) Interview

We talk to Lincoln Moore, the Executive Director of DekelOil about the recent RNS regarding the 2018 Q3 Production and Sales Update. He also provides an update on both Guitry and the Cashew Processing Plant at Tiebissou.

 

10 October 2018: DekelOil Public Limited

Q3 2018 Production & Sales Update

DekelOil Public Limited, the West African focused agricultural company, is pleased to provide a production and sales update for its Ayenouan palm oil project in Côte d’Ivoire (the ‘Project’) for the quarter ended 30 September 2018.

Q3 2018 production of Crude Palm Oil (‘CPO’), Palm Kernel Oil (‘PKO’) and Palm Kernel Cake (‘PKC’) at the Project showed a significant year on year improvement compared to Q3 2017. This has been driven by what appears to be a region-wide recovery in Fresh Fruit Bunch (‘FFB’) volumes to more normal seasonal levels. Q3 2018 production and sales figures for the Project, which includes one of West Africa’s largest extraction mills, are detailed in the table below:

 

Q3 2018

Q3 2017

Increase

/ (Decrease)

H1 2018

FFB collected (tonnes)

24,938

21,626

15.3%

96,195

CPO production (tonnes)

5,371

4,734

13.5%

22,242

CPO sales (tonnes)

5,471

7,217

-24.2%

22,271

Average CPO price per tonne

544

655

-16.9%

549

PKO production (tonnes)

526

464

13.4%

1,793

PKO sales (tonnes)

578

704

-17.9%

1,480

Average PKO price per tonne

691

904

-23.6%

893

PKC production (tonnes)

681

662

2.9%

2,197

PKC sales (tonnes)

643

668

-3.7%

2,304

Average PKC price per tonne

51.9

42

23.6%

50

 

15% increase in year on year Q3 FFB yields partially offsets poor region-wide FFB harvest during H1 2018 peak season

Rebound in FFBs grown in the region in Q3 is in line with historic performance where poor region-wide harvests (as was the case in H1 2018) are typically followed by periods of stronger yields

CPO sales were down 24% as a result of less inventory on hand at the half year following this year’s low high season production – the Company continues to sell all CPO produced

CPO extraction rate based on actual FFB processed remained stable compared to Q3 2017 which demonstrates the mill at Ayenouan continues to operate efficiently

The CPO and PKO pricing environment has remained extremely challenging with international prices trading at 10 year lows

CPO sold 11% higher than international benchmark prices, in line with initiative to extract premium pricing from customers to mitigate the impact on gross margins of continued strong competition for FFBs following poor high season harvest

CPO international benchmark prices averaged €489 during Q3

PKO pricing was 9.2% lower than international prices. Local fluctuations above and below the international price are quite typical given the small local market for PKO

DekelOil Executive Director Lincoln Moore said, “The strong year on year rebound in FFBs during the quarter and subsequent pick-up in CPO production at Ayenouan is most welcome and bodes well for production returning to more normal levels in 2019. Having increased the mill’s capacity in time for the 2018 peak harvesting season, we are ready to maximise production in 2019 should the recovery in yields extend to next year’s high season and further into the future, as history suggests it should.

“While lag effects stemming from the poor 2018 harvest continue to weigh on gross margins, we have managed to partially offset these by selling our produce at a premium to international prices. Together with our efforts to secure kernels from external sources for processing, shareholders can rest assured that we are working hard to counterbalance external factors that are beyond our control, including weak international CPO pricing. As we have set out, we are focused on transforming DekelOil into a multi-project, multi-commodity producer, and one that will be well-equipped to navigate the challenges faced by all producing agricultural companies.”

 


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