One of the world’s largest integrated suppliers of certified ‘sustainable’ palm oil has suffered a 13.2% decline in sales as pre-tax profits plummeted 70.4%, despite it winning growing share of the UK market.
New Britain Palm Oil – operator of Britain’s only Roundtable for Sustainable Palm Oil certified palm oil refinery, in Liverpool, and supplier to many of the UK’s largest grocers and manufacturers – blamed the performance on currency effects, lower market prices and poor weather conditions.
“The past year has presented a number of unprecedented climatic and market-related challenges, some of which have had a significant adverse effect on the group’s performance,” said Antonio Monteiro De Castro, chairman of New Britain Palm Oil.
Torrential rains in Papua New Guinea hampered harvests during the first quarter of 2012, contributing to a 6.1% year-on-year decline in palm kernels processed by the company in the year to 31 December, 2012.
The situation was exacerbated by the appreciation the Papua New Guinean Kina against the US dollar, said Monteiro De Castro.
“The appreciating Kina has increased our domestic wages and any locally consumed services and materials in US dollar terms,” he said.
The final factor was falling market prices for palm oil and palm kernels. Palm oil prices peaked at close to $1,200 per tonne in April but had fallen to $770 in December. The fall in kernel prices was even more dramatic: in 2011 the price reached $2,330 but fell to a low of $725 last year, said the company.
“While only 10% of our palm oil is palm kernel oil, this large fall in prices had a significant impact on our 2012 performance compared to 2011,” added Monteiro De Castro. “The group’s profitability has been significantly impacted.”
Despite the global difficulties, the company reported market share gains in the UK, aided by the conversion of retailers and manufacturers to RSPO-certified palm oil. The company will be doubling capacity at its Liverpool refinery, with the addition of a second deodoriser in the second quarter of this year.