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R.E.A. Holdings forecasts a recovery

By BFN News | 10:27 AM | Tuesday 11 June, 2013


R.E.A. Holdings, which cultivates of oil palms in Indonesia and produces crude palm oil and crude palm kernel oil, has reported that production of crops during January and early February were hit by village issues, and some limited harvesting blockages had a further (but less material) negative impact on crops in March and early April. The delays in harvesting caused by these disruptions adversely affected oil extraction rates and oil quality but the resumption of normal harvesting operations since mid-April has meant that harvesting intervals across the business are steadily returning to normal with both oil extraction and oil quality now much improved. The company says that village settlements reached in January and February are being respected and outstanding issues are progressively being resolved. Disruptions to harvesting, such as those experienced during 2012 and the early part of this year, also affect the fruiting cycle of the oil palm. This means that cropping levels are currently lower than would otherwise have been the case but it can be expected that this will be offset by higher cropping levels during the later months of the year. R.E.A. Holdings has also announced that development is about to start on a first 2,000 hectare portion of the land areas held by the company's subsidiary, PT Putra Bongan Jaya. It is expected that a second area of in excess of 2,000 hectares will also become available for development in the near future. The results for the first half of 2013 will reflect the below trend level of crops experienced in the year to-date and will be impacted by the quality discounts on sales during the period. Provided that the current more stable situation on the group's estates is maintained, it is confident that, with oil quality now returning to normal, an upturn in cropping levels in the second half will mark the beginning of a sustained period of recovery. At 10:27am: (LON:RE.) R.E.A. Holdings share price was +7.5p at 409p Story provided by StockMarketWire.com

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