MP Evans Group PLC (AIM:MPE) hiked its interim dividend by 20% as profits soared in the first half of the year.
The sustainable palm oil producer increased operating profit by 78% to US$41.6 million for the first six months of 2024, as higher production was accompanied by higher palm-oil prices.
Total crop processed swelled 5%, as the company revealed in an earlier trading update, with total production rising 6% to 177,000 tonnes.
Of this, certified sustainable production jumped 24% to 119,500 tonnes, representing 68% of the group's total output, including that from independent mills, up from 58% a year ago.
The average mill-gate crude palm oil (CPO) price rose to US$771 per tonne, up 2% from the same period last year.
Production costs also fell, continuing a trend observed in the second half of last year as fertiliser costs dropped from peaks observed around the end of 2022. The total cost of production was US$529 per tonne compared to US$574 per tonne.
The average cost of production is expected to fall during the second half of the year, the company said, partly as a result of rising production, but also reflects the fact that more than half of fertiliser application takes place in the first six months of the year.
Directors declared an interim dividend of 15p per share, compared to 12.5p a year ago.
Chairman Peter Hadsley-Chaplin said: "The second half of the year has, thus far, seen palm oil prices strengthen further and, accordingly, the group is well placed for another strong result for 2024 as a whole."
Following acquisitions of 10,000 planted hectares last year, the group has also effectively acquired approximately 1,700 hectares of its own high-quality planted areas after a June agreement with one of its minority shareholders to acquire their 5% interest in the majority of the group's Indonesian subsidiaries based on a price of US$9,000 per planted hectare, compared to the average independent valuation of US$18,400.
“Whilst this transaction has a limited impact on the results for the first half of 2024, it will be earnings enhancing for the remainder of the year and beyond,” the company said, with replanting and improvements of agronomic standards of many acres from purchases in the past year also expected to result in significant improvements in the coming years.