M.P. Evans Group (MPE) H1 2024 earnings summary

Executive summary

• Total crop processed rose 5% year-over-year to 759,700 tonnes, with CPO production up 6% to 177,000 tonnes and own crops up 7%.

• Gross profit surged 82% to $42.1 million, with operating profit up 78% to $41.6 million, driven by higher production, improved extraction rates, and lower costs.

• Earnings per share increased 81% to 44.9p, and interim dividend was raised 20% to 15p per share.

• All six mills are now certified to produce sustainable palm oil, with certified output up 24% to 119,500 tonnes.

• Strong cash generation and a robust balance sheet support ongoing growth, shareholder returns, and expansion.

Financial highlights

• Revenue increased 22% year-over-year to $164 million, with gross margin improving to 26% from 17% in H1 2023.

• Group cost per tonne of palm product fell 14% to $458, mainly due to lower fertilizer prices.

• Profit for the period reached $31.7 million, up from $17.8 million, and net profit attributable to shareholders was $30.1 million.

• Cash generated from operations reached $60 million, with a cash conversion rate of 144% and period-end cash at $35.7 million.

• Net gearing at 1%, with net debt of $7.3 million.

Outlook and guidance

• Full-year crop production expected to be broadly in line with 2023, with peak months later in 2024 and cropping levels anticipated to increase.

• CPO prices remain robust, with year-to-date average at $777 per tonne and some September tenders above $800.

• Unit costs expected to fall further in H2 2024, though fertilizer cost benefit will be lower.

• Risks include delayed rainfall affecting crop timing, reduced FX benefit from a weaker rupiah, and currency fluctuations.

• Confident in medium- and long-term growth from maturing plantations, yield improvements, and ongoing crop growth.