LONDON-listed New Britain Palm Oil (NBPO) has maintained an upbeat outlook for the year ahead despite the company posting a 17.5 per cent drop in annual revenue to US$558.7 million on the back of lower prices for palm oil.

The company, which produces palm oil in Papua New Guinea, released its preliminary results for the year ended 31 December, 2013 in February, indicating that the average price received for crude palm oil was US$868 per tonne. This compares to the average price of US$1,062 per tonne achieved in the previous corresponding year.

Compounding lower pricing for the 12 months was a net foreign exchange loss of US$17.5 million compared to a gain of US$8 million in 20112.

Profit before tax decreased 78.8% to US$17.3 million while earnings before interest, tax and depreciation sank 40.3% to US$96.8 million.

At the end of 2013, group forward sales totalled about 76,000 tonnes of its 2014 production at an average price of US$922 per tonne. As of 21 February, forward sales of the group were about 121,000 tonnes at an average price of US$927 per tonne.

During the year, a total of 2.08 million tonnes of fresh fruit bunches (FFB) was produced, down from 2.27 million tonnes in 2012.

Total oil production was 507,856 tonnes, compared to 545,207 tonnes a year prior.

Despite the drop in profit the company managed to increase its net cash position generated from operating activities to US$142.6 million, up from US$141.8 million in 2012.

During 2013, the groups cost optimisation and efficiency review achieved a circa US$35 million year-on-year saving with approximately half attributable to freight, fuel and fertiliser and half from reductions in management, labour and general overheads

At the end of 2013, the group had cash holdings of US$30.9 million and bank overdrafts plus short term borrowings of US$22.2 million, equating to a net positive cash position of US$8.7 million.

Commenting on the results, NBPO chairman Antonio Monteiro De Castro said the past year had been very challenging.

“With palm oil prices remaining subdued for the first half of the year, and akin to 2012, we endured another exceptionally wet first quarter in our biggest production location, which hampered crop harvesting and collection,” he said.

“At most of our production sites, and regionally across South East Asia as a whole, FFB production was reportedly lower than expected in the second half of the year, suggesting this to be a biological yield effect.”

While the past two years had been met with disappointing production, extraction rates and profitability, the company said measures put in place to reduce cash costs of production combined with the deprecation of the PNG Kina made it well-positioned to return to growth in the current year and improve operating margins.

NBPO was confident of improved demand and pricing of palm oil in the near-term thanks to the strengthening of the global economy and mandatory biodiesel implementation by the world’s two biggest palm oil producers.

“Looking forward, the group is well positioned to capitalise on an improving palm oil pricing environment with lower production costs and strong demand for sustainable and traceable palm oil products,” Mr De Castro said.