Annual results of the SIPEF group per 31 December 2019

February 13, 2020

·        Due to a general decline in palm crops in Indonesia and the effect of three volcanic eruptions in Papua New  Guinea, the annual palm oil production of the SIPEF group fell by 11.2% compared with the previous year.

·         Because of the increased contribution of the young maturing areas, the Indonesian palm activities experienced a limited volume growth (+2.5%) in the fourth quarter, compared with the same period a year ago, but the overall yearly production reduced by 0.7%.

·         The oil palm plantations in Papua New Guinea gradually recovered from the three volcanic eruptions of Mount Ulawun earlier in 2019, but the palm oil production at the own plantations fell by 38.1% compared with the fourth quarter of 2018.

·         The damage caused by these eruptions affected almost half of the planted hectares and it will take at least two years for up to 3 000 hectares to be returned to their optimal production conditions.

·         The result before tax was KUSD 852, compared with KUSD 39 598 in 2018, chiefly due to low market prices for palm oil.

·         Due to the tax expense and the negative share of the research activities, the IFRS net result, share of the Group, was KUSD -8 004, compared with KUSD 30 089 the previous year. The proposal will be not to declare a dividend for the financial year 2019, in line with the applied dividend policy.

·         The expansion of the activities in South Sumatra continued steadily, in spite of the limited cash flow, with the planted hectares at the end of 2019 increasing by 2 427 hectares to 82 967 hectares (of which 76 302 hectares share of the Group).

·         The investment expenses amounted to KUSD 66 746, with net debt up to KUSD 164 623.

·         On an improving palm oil market, 36% of the expected palm oil production for 2020 has already been sold at an average price of USD 727 per tonne CIF Rotterdam, premiums included, and, in spite of the negative impact of the coronavirus, the expected price trend remains positive.

·         Having entered in a more comforting price environment for palm oil since the end of 2019, with prices touching the USD 750 to USD 800 per tonne levels, there is a prospect for improving  results in 2020.

·         As an RSPO-compliant producer, SIPEF continues to supply certified, traceable sustainable palm oil to the European and Asian markets.


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