LONDON - R.E.A. Holdings plc (LSE:RE.), an agricultural firm specializing in oil palm cultivation and palm oil production in Indonesia, has reported a decrease in palm oil production for the year ended December 31, 2024, due to climatic factors and planned replanting activities. Despite reduced crop volumes, the company has seen an increase in average selling prices for its products, which has helped to offset the impact of lower production levels.
The company’s Fresh Fruit Bunch (FFB) harvest dropped by approximately 10% from the previous year, with total FFB production reaching 893,116 tonnes, down from 994,083 tonnes in 2023. Consequently, Crude Palm Oil (CPO) production also fell to 190,235 tonnes from 209,994 tonnes. However, the CPO extraction rate remained relatively stable at 22.2%.
R.E.A. Holdings reported that the average price realized from sales of CPO in 2024 was $819 per tonne, up from $718 per tonne in 2023. The average selling price for Crude Palm Kernel Oil (CPKO) also increased to $1,094 per tonne from $749 per tonne in the prior year. The company attributed the firmer selling prices throughout 2024 to the higher global market prices, which peaked at $1,390 per tonne in mid-December before ending the year at $1,265 per tonne.
On the sustainability front, R.E.A. Holdings has made progress in its Environmental, Social, and Governance (ESG) efforts. The company’s score in the SPOTT assessment by the Zoological Society of London, which evaluates palm oil producers on ESG disclosures, increased to 91.5% in 2024, placing it 8th out of 100 assessed companies.
The group has also been preparing for the European Union’s due diligence system (EUDR) by installing processes and control systems that comply with the regulation. Although the implementation of EUDR has been delayed by one year, R.E.A. Holdings is ready to supply EUDR compliant CPO, which is expected to command higher sales premia.
In addition to palm oil operations, the company has been developing stone and sand concessions, with ATP producing 75,000 tonnes of stone and MCU stockpiling 16,000 tonnes of sand by the end of 2024. These new ventures are expected to contribute positively to the company’s financial performance in 2025.
Financially, R.E.A. Holdings has been active in managing its debt, purchasing and canceling a total of £9,186,000 nominal of its 8.75% guaranteed sterling notes due 2025. The company has also secured additional local bank funding in Indonesia, which has provided it with additional cash resources.
Despite the challenges faced in production, the company is optimistic about the future, expecting CPO prices to remain high due to tight supplies and increased biodiesel use in Indonesia. R.E.A. Holdings anticipates improved profitability for 2024 and further improvements in 2025, supported by contributions from its stone and sand operations. The final results for 2024 are scheduled to be announced at the end of April 2025, as per the company’s usual reporting timetable.
This article is based on a press release statement from R.E.A. Holdings plc.
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