Palm oil price surge lifts Anglo Eastern

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Date: Wednesday 30 Apr 2008

LONDON (ShareCast) - Palm oil producer Anglo-Eastern Plantations registered record profits in 2007, helped by the surge in palm oil prices.

Revenue in 2007 grew to $127.9m from $79.1m in 2006, while profit before tax rose to $52.6m from $26.7m.

Despite expenditure of $14.5m on three acquisitions and capital expenditure of $12.2m in 2007, net cash at the end of the year had risen to $23.3m from $9.6m at the end of 2006.

The market average price for crude palm oil (CPO) in 2007 was $790 per metric ton, up 65% on 2006’s average price of $479 per metric ton.

Following four land acquisitions the group is targeting a doubling of the planted area on its estates in the next six years and has arranged for borrowing facilities to be in place to support this expansion.

Fresh fruit bunches (FFB) crops this year have been satisfactory, with production running about 20% higher than in the corresponding period of 2006, but the group said it is too early to tell whether this rate of improvement can be maintained over the course of the whole year.

The crude palm oil price currently stands at around $1,160 per metric ton, having briefly hit a peak of $1,390 per metric ton in March. Though the price is trading below its recent peak it is still well above the year-end price of $960 per metric ton.

The group said that although an element of the price rise could be attributed to investment demand from financial institutions, most industry observers expect demand from food companies to remain strong throughout 2008, with demand especially strong from China and India.

In view of the positive outlook for the price of palm oil and the recent satisfactory harvest the board has proposed a 30% increase in the annual dividend to 14 cents from 10.8 cents in 2006.

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