Oil palm plantations operator MP Evans (LON: MPE) increased its interim dividend by 20% to 15p/share on the back of better than expected interim figures. Higher crop production and prices meant that the Indonesia-focused oil palm plantations operator did especially well in the first half. The July and August production was more disappointing, but full year expectations for AIM-quoted MP Evans have been upgraded.
In the six months to June 2024, revenues increased from $134.5m to $163.7m, while pre-tax profit jumped from $23.4m to $41.6m.
There was a 5% increase in crop processed to 759,700 tonnes, while crude palm oil production was 6% higher at 177,000 tonnes. The mill-gate price improved from $755/tonne to $771/tonne.
There was also a reduction costs to produce the palm oil from $535/tonne to $458/tonne. That is a major factor behind the rise in profit.
The crude palm oil price has been less volatile in recent times, and it appears that it will stay around the current level. Cavendish is basing its expectations for 2025 and 2026 on a price of $700/tonne.
In June, the 5% minority stake in nearly all its Indonesian subsidiary was acquired for $6m. That valued the land at $9,000/hectare, which compares with Cavendish’s estimate of the overall value of land holdings of $18,400/hectare.
Net cash is expected to be $18.1m at the end of 2024 and without land acquisitions this cash pile will rise significantly over the next two years. Even though, earnings growth is expected to be slower than in 2024.
Earnings forecasts have been raised by 11% to 122.6 cents/share. At 890p, the shares are trading on less than ten times 2024 earnings, while the forecast yield is 5.5%.