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DekelOil eyes profits as production surges, new products to boost 2016

Last updated: 15:24 14 Sep 2015 BST, First published: 08:24 14 Sep 2015 BST

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DekelOil added it expects palm oil volumes will be higher in the second half.

-- adds additional management comment, share price --

Record production and sales of palm oil helped Ivory Coast-based DekelOil (LON:DKL) almost treble interim revenues and come close to break even.

The group produced 21,836 (2014: 7,932) tonnes of crude palm oil and 3,733 (2014: 1,311) tonnes of kernels in the half year to June.

DekelOil added it expects palm oil volumes will be higher in the second half and to continue to increase in 2016.

It opened a new mill in 2014, which is still only running at 50% capacity said executive director Lincoln Moore.

The higher production helped DekelOil offset the slide in the palm oil price, which has followed the crude price lower.

Prices of palm oil are at their lowest since 2009, but DekelOil said it was managing this price fluctuation better than most as it receives a premium price as local demand for palm oil has outstripped supply.

Interim revenues rose by 187% to €12.9mln (€4.5mln), while underlying profits (EBITDA) jumped eight-fold to €2.3 mln (2014: €300,000). Pre-tax losses fell to €86,000 from €761,000.

DekelOil said initiatives last year to implement a logistics strategy to facilitate and simplify delivery of smallholder feedstock to the new mill had greatly helped the production figures.

Sales were 19,184 tonnes of palm oil at an average price per tonne of €617 and 3,760 tonnes of kernel sold at €183 per tonne ex-mill. 

Lincoln Moore, DekelOil’s executive director said: “Having increased our production dramatically, and with our KCP (kernel crushing plant) due to be operational in Q4 2015, we are confident that we will transform the group's profitability for the full year.

At present, Moore said it sells kernels but with the crushing plant it can produce kernel palm oil, which sells at a 30-40% premium to ordinary palm oil, and kernel cake, an animal feed.

These products can add a further €2.5mln to the company’s underlying profit (EBITDA) in 2016, said Moore.

He was also hopeful of some recovery in the palm oil price over the second half of the year as palm oil supplies coming of South East Asia and US production of soya, a substitute for CPO, ease back from current peaks.

Shares rose 5.5% to 1.05p.

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