AGM Statement

RNS Number : 0182F

Dekeloil Public Limited

24 October 2018

 

DekelOil Public Limited / Index: AIM / Epic: DKL / Sector: Food Producers

24 October 2018

DekelOil Public Limited ('DekelOil' or 'the Company')

AGM Statement

DekelOil Public Limited, the West African focused agricultural company, is holding its Annual General Meeting ('AGM') later today.  At the meeting, Youval Rasin, CEO, will make the following statement:

"At last year's AGM, I spoke of DekelOil becoming a multi-project West African focused agriculture company.  This year I am pleased to confirm DekelOil is now making significant progress towards this goal after we secured an option to acquire 58% ownership of an initial 10,000tpa cashew processing project at Tiebissou, which is currently under development.  In addition, we have also broken ground on our second palm oil project in Guitry.

"Becoming a multi-commodity company is a key objective for DekelOil, as it not only enables us to scale up our revenues and profitability, but also to significantly diversify our end markets.  Being an unrelated commodity to palm oil, international cashew prices have their own set of market dynamics and drivers.  With global consumption forecast to continue growing for the foreseeable future, the underlying market backdrop for cashews is supportive and we are therefore keen to gain exposure to it.  Furthermore, while Cote d'Ivoire is one of the world's biggest producers of Raw Cashew Nuts ('RCN'), the vast majority of its production is exported for processing due to a lack of in-country capacity. 

"As well as offering attractive margins, processing cashews will also have the added benefit of smoothing out DekelOil's revenues over the course of the year. Unlike fresh fruit bunches ('FFB') delivered to our mill at Ayenouan for processing into crude palm oil ('CPO'), cashews can be stored and processed throughout the year, thereby avoiding revenues peaking and troughing in tandem with high and low harvesting seasons, as is the case with Ayenouan's revenue profile.

"The benefits of having diverse revenue streams were made all too clear following the challenging trading conditions experienced at Ayenouan over the last six months.  Here, a poor high season affected production of fresh fruit bunches across the region, leading to increased competition to secure feedstock for processing and downward pressure on gross margins, despite our efforts to mitigate these through various initiatives.  International palm oil prices trading at cyclical lows compounded the adverse impact on the mill's performance during the first half of the year which saw a drop in CPO volumes produced to 22,242 tonnes in H1 2018 from 26,947 in H1 2017.  With global palm oil prices falling to lows of US$550 a tonne, total revenues at Ayenouan were €14.1m (H1 2017: €19.6m) which generated EBITDA of €1.1m (H1 2017: €3.7m).

"The half year results followed a third consecutive year of record financial results for DekelOil for the year ended 31 December 2017, including revenues of €30.2 million, EBITDA of €4.5 million and profit after tax of €1.6 million.  The quick turnaround in performance serves to highlight how trading conditions for agriculture companies can and do change over short timeframes.   This, of course, works both ways and we are hopeful that, at least in terms of volumes of fresh fruit bunches produced in the region around Ayenouan, conditions are already showing signs of material improvement. Earlier this month, we announced a 15.3% increase in year on year Q3 FFB yields to 24,938 tonnes compared to 21,626 tonnes in Q3 2017, which in turn fed through to a 13.5% increase in CPO produced at the mill to 5,371 tonnes compared to 4,734 tonnes in Q3 2017.  While there is some way to go to make up the shortfall in FFB produced in H1 2018, we are encouraged that the Q3 2018 performance is in line with the historic precedent of poor harvests in Cote d'Ivoire being followed by strong rebounds in production.

"Nevertheless, we remain keen to become a multi-commodity producer as soon as possible.  By securing an option to acquire a controlling stake in a cashew project which is about to commence the 12 month construction phase shortly, we have been able to dramatically accelerate this process.   Today, DekelOil has a portfolio of three agriculture projects in Cote d'Ivoire: one of which is already producing and two that are under development.  This time next year, as Tiebissou approaches first production, we expect to be on the brink of having two producing projects."

** ENDS **

For further information please visit the Company's website or contact:

DekelOil Public Limited Youval Rasin Shai Kol Lincoln Moore	[phone]
Cantor Fitzgerald Europe (Nomad and Joint Broker) David Foreman Richard Salmond	[phone]
VSA Capital (Joint Broker) Andrew Monk (Corporate Broking) Andrew Raca (Corporate Finance)	[phone]
Optiva Securities Limited (Joint Broker) Christian Dennis Jeremy King	[phone]
St Brides Partners Ltd (Investor Relations) Frank Buhagiar Cosima Akerman	[phone]

Notes:

DekelOil Public Limited is a low-cost producer of palm oil in West Africa, which it is focused on rapidly expanding including its recent acquisition of an option to acquire a majority interest in a cashew processing company.  Feedstock for the mill comes from several co-operatives and thousands of smallholders, however it also has nearly 1,900 hectares of its own plantations.  Furthermore, it has a world-class nursery with a 1 million seedlings a year capacity. 

 

END

 

 

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