MP Evans reports strong first half, extends share buyback

16th Sep 2024 11:12

(Sharecast News) - Indonesian palm oil producer MP Evans announced a strong set of unaudited interim results for the six months ended 30 June on Monday, with increases in production, profitability and dividends.

The AIM-traded firm said the total crop processed by the group rose 5% to 759,700 tonnes, up from 721,100 tonnes in the same period last year.

It said that increase in raw material led to a 6% boost in the production of crude palm oil (CPO), totaling 177,000 tonnes compared to 166,200 tonnes in 2023.

The mill-gate price of CPO saw a modest 2% increase to $771 per tonne, up from $755 per tonne previously.

Certified sustainable production experienced 24% growth, reaching 119,500 tonnes from 96,500 tonnes last year.

Additionally, the cost of palm products decreased 14% to $458 per tonne, down from $535 per tonne, reflecting improved operational efficiencies.

Financially, MP Evans reported a 78% surge in operating profit to $41.6m, up from $23.4m in the prior year.

Earnings per share increased 81% to 44.9p, compared to 24.8p in 2023.

In line with its strong performance, the company declared a 20% increase in its interim dividend, raising it to 15p per share from 12.5p last year.

The group's net debt stood at $7.3m, resulting in a low net gearing of 1%, compared to a net cash position of $2.5m at the end of 2023.

In a separate announcement, MP Evans extended its share buyback programme, which had expired on 14 September.

The renewed programme has a budget of £2m and would run until 16 December.

All shares repurchased would be cancelled in a bid to enhance earnings per share and provide value to shareholders.

The board said it believed the company's shares were currently undervalued, noting that the enterprise value was below the independent valuation of its assets.

The robust balance sheet would enable MP Evans to repurchase shares at advantageous levels, capitalising on market conditions.

It said the buyback would operate under the authority granted at its annual general meeting held on 14 June.

Share purchases would adhere to regulatory limits, not exceeding 25% of the average daily trading volume over the prior 20 trading days.

To implement the programme, MP Evans said it had engaged Cavendish Capital Markets to independently conduct on-market purchases of its 10p shares.

The board said it would monitor the progress of the buyback and would decide in due course whether to extend it further.

"Following higher production and higher palm-oil prices, the board is delighted to report a significantly improved first-half profit, and a 20% increase in the interim dividend," said chairman Peter Hadsley-Chaplin.

"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."

At 1045 BST, shares in MP Evans Group were up 4.8% at 895p.

Reporting by Josh White for Sharecast.com.