Palmy Days is an American musical comedy, choreographed by Busby Berkeley, released in 1931.
Ninety years on MP Evans is delivering palmy days for its shareholders. It is worth observing, while institutional shareholders may not be as loyal, it has private shareholders who have been faithful to the company. I know this because I have seen the same faces at AGMs for decades.
Yesterday the 2021 results were released. Only a few years ago MPE was beavering away planting new estates and building mills but had high borrowings and palm oil prices were low; fortunately interest rates were low too. Nevertheless dividends rose with hope of more jam tomorrow.
The picture now is rather different. For once, it’s jam today and likely more in the years ahead.
“Financial
− Profit for the year up by 314% to US$91.8 million (2020 US$22.2 million)
− Operating profit up by 266% to US$114.6 million (2020 US$31.3 million)
− Average mill-gate price for Group CPO up by 37% to US$810 per tonne (US$591 per tonne)
− Sustainability premia increased to US$4.3 million (2020 US$2.6 million)
− Reduction in net debt to US$5.4 million (2020 US$78.1 million)
− Basic EPS up by 296% to 115.6 pence (2020 – 29.2 pence)
− 59% increase in normal dividend for the year with proposed final dividend of 25p per share (2020 – 17p per share)
− Special dividend of 5p per share paid on Malaysian land sale
Operational
− Total crop processed up 13% to 1.4 million tonnes
− 100% of Group and scheme-smallholder crop grown to sustainability standards
− 55% of total output currently certified sustainable pending formal certification of newer mills
− Group crops up to 810,000 tonnes, a 12% increase
− Planting at youngest estate, Musi Rawas, exceeded 9,000 hectares
− Crude-palm-oil production up 15% to 313,000 tonnes
− New Group mill at Bumi Mas began production in August 2021
Group value
− Group equity value of £12.65 per share at 31 December 2021
Current trading
− Seasonal, 10%, downturn in crop in early 2022: recovery to long-term growth pathway expected as year progresses
− Significant increase in palm-oil price in same period, average mill-gate US$1,050
− Strength in price partly attributable to restricted vegetable oil supply due to tragic events in Ukraine
− Year-end net debt eliminated: net cash US$27 million by mid-March”
Some twenty years ago the chairman of MPE moved the company’s focus from Malaysia to Indonesia. This was in part financed by selling Malaysian plantations for development and by borrowing. It was a long term view and it has been proved successful. Why don’t other chairmen take a similar long view? Because they are only in the job for a few years and want short term success. MPE sticks to its knitting.
