High veg oil prices won't last, warns REA

21st Apr 2011 12:34

The food producer and processor, with operations in Indonesia, REA Holdings, saw profits surge as palm oil prices headed north. The company announced a profit before tax of $50.4 million for 2010 in comparison with 2009's $41.7million, which makes for growth of 21%. That after a gain of $1.6m on the revaluation of biological assets.The profit surge was on the back of a 45% increase in its revenues, to $114m. Its crop of fresh fruit bunches grew 6%, to 518,742 tonnes.32,083 hectares were planted or under development at 31 December 2010, an increase of 1,093 hectares during the year.Also of interest,it started its mining operations at the Kota Bangun coal concession in in November 2010, with initial coal sales of 15,000 tonnes scheduled for April 2011.The company's directors have proposed paying a final dividend, in respect of 2010, of 3p per share to be paid to all registered shareholders at the 2nd of September 2011. The aforementioned is in lieu of the now customary second interim dividend paid each year after the company's habit of paying two interim dividends drew criticism from some quarters, because it denied shareholders the chance to vote on the full year dividend total.REA Holdings has also signalled that it will consider further capitalisations of new preference share issues with the aim of better managing its cash resources. Lastly, management continues to be of the opinion that vegetable oil markets will remain cyclical and that it is therefore likely that the current high prices will eventually result in increased supply and lead to lower prices, albeit probably not in 2011.ab