SIPEF Press Release
Regulated information
The connection to the world of sustainable tropical agriculture
Results of the SIPEF group
as per 31 December 2022 (12m/22)
Record performance year for the SIPEF group
- Total Group production of palm oil increased by 5.1% compared with previous year.
- The combination of excellent productions and selling prices resulted in an outstanding financial performance:
- Net recurring result, share of the Group, after tax, amounted to KUSD 108 157, an increase of 30.7%, compared with KUSD 82 746 last year.
- Net recurring profit per share increased by 32.0%, to a record amount of USD 10.40.
- Operational cash flow reached KUSD 165 295, a rise with 3.1 % on previous year.
- Net financial position for the Group turned positive, even after capital expenditures of KUSD 79 294, mainly related to the continued expansion in South Sumatra.
- Sales exceeded USD 500 million, equity rose above USD 800 million and total assets surpassed USD 1 billion, all historical milestones for the Group.
- In line with the 30% payout ratio of previous years, the board of directors proposes to increase the gross dividend per share by 50%, from EUR 2.00 to EUR 3.00, payable on 5 July 2023.
- Cultivated areas in Musi Rawas continued to grow in compliance with RSPO, by 1 453 hectares to a total area of 16 423 hectares. The Dendymarker own plantations are now fully replanted.
- SIPEF can look forward to another strong performance year, thanks to increasing annual production volumes and controlled unit production costs. The recurring result 2023 will highly depend on the further evolution of the palm oil prices.SIPEF started a project, together with a licensed assessor, to develop a balanced oil palm landscape approach for smallholders and customary landowners around Hargy Oil Palms' operations in Papua New Guinea.
- SIPEF was the first RSPO member to work with the Dispute Settlement Facility designed by RSPO, engaging with its stakeholders as an important part of its human right due diligence and grievance process.
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1. Management report
1.1. Group production
Group production
2022 (in tonnes) | Own | Third | Q4/22 | YoY% | Own | Third | YTD | YoY% |
parties | parties | Q4/22 | ||||||
Palm oil | 80 456 | 21 149 | 101 605 | 9.8% | 329 090 | 74 837 | 403 927 | 5.1% |
Rubber | 339 | 174 | 513 | -19.8% | 1 368 | 555 | 1 923 | -27.2% |
Bananas | 6 269 | 0 | 6 269 | -23.0% | 32 270 | 0 | 32 270 | 0.2% |
2021 (in tonnes) | Own | Third | Q4/21 | Own | Third | YTD | ||
parties | parties | Q4/21 | ||||||
Palm oil | 75 067 | 17 443 | 92 510 | 316 740 | 67 438 | 384 178 | ||
Rubber | 433 | 207 | 640 | 1 996 | 645 | 2 641 | ||
Bananas | 8 144 | 0 | 8 144 | 32 200 | 0 | 32 200 |
The fourth quarter, the Group's palm oil production grew by 9.8% against last year's fourth quarter. As a consequence, annual palm oil production growth reached 5.1%.
In Indonesia, North Sumatra, annual french fruit bunches (FFB) production in the mature plantations on mineral soil increased by 2.3%, rainfall in 2022 being generally supportive of palm growth and bunch development. The mature plantations on organic soils experienced a fairly wet fourth quarter. Despite good water management, significant lower yields were experienced (-7.5%) against the same quarter last year, reducing the annual crop performance by 1.8% compared with last year.
In the Bengkulu region high rainfall of over 550 mm per month in October and November disturbed the harvesting and transport of bunches. This resulted in a decrease in production of 5.3% compared with the fourth quarter 2021. The annual crop for the Agro Muko Group was 9.0% lower than the previous year, mainly due to the remaining effect of the 2019 drought. As a reminder, FFB production decline experienced due to this phenomenon in the first semester of the year, against 30 June 2021, amounted to 13.8%.
In South Sumatra, FFB production continued to rise, with 59.6% growth for the fourth quarter and an annual increase of 53.7% compared with the full year 2021. These growth rates were also largely reflected in smallholders' purchases (Plasma). The rising contributions from both the Musi Rawas plantations and those of Dendymarker were the direct result of an enlarged number of harvestable hectares, and increasing bunch weight and bunch numbers on maturing estates.
In Papua New Guinea the exceptional performance of the oil palm plantations, also continued in the fourth quarter, both for the crop harvested on own estates (+5.9% versus the fourth quarter last year) and for the smallholder FFB purchases (+19.5% against the same period 2021). Thanks to annual rainfall reaching 59% of the five-year average, 21% lower than last year, in combination with a better than anticipated recovery from the impact of the volcanic eruption in 2019, a record crop of 403 419 tonnes was harvested on the own estates in 2022. Also, the smallholders' purchases hit a record volume of 254 356 tonnes. As a result, the overall volumes processed over the year increased with 9.8% in comparison with 2021.
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Due to these steady growing performances, total FFB production for the Group increased by 7.6% in the fourth quarter and by 5.6% for the full year 2022.
The average oil extraction rate (OER) for the fourth quarter of 24.2% was the highest for the year, mainly driven by the outstanding average OER of 25.7% of the mills in Papua New Guinea. This resulted in an average annual OER of 24.0% for the Group, equal to the 2021 average OER.
Some FFB had to be sold outside the Group as the expanded capacity of the Dendymarker mill in South Sumatra was only fully operational as from the second semester of the year. Consequently, the Group's growth in palm oil of 5.1% was slightly lower than the growth of 5.6% in palm fruits.
Declining rubber production was also recorded in the fourth quarter of the year (-19.8%), while the annual production decreased by 27.2% against 2021 production. This related entirely to the smaller number of rubber trees tapped, a result of the ongoing conversion from rubber to palm activities in the SIPEF group.
Fourth quarter banana production recorded a fairly large decline following unfavourable weather conditions. As a result, production cycles were shifted and flowering cycles were delayed, mainly on the Motobé and Azaguié sites.
Banana production for the year 2022 ultimately remained close to those of the year 2021. The additional production from the recently developed extension on the Lumen site compensated for the reduced volumes from the Motobé plantation. This latter decrease in production was the consequence of generally lower temperatures and high rainfall, exceeding the five-year average by more than 30%, resulting in the flooding of certain parcels.
1.2. Markets
Average market prices
In USD/tonne | |
Palm oil | CIF Rotterdam* |
Rubber | RSS3 FOB Singapore** |
Bananas | CFR Europe*** |
* Oil world Price Data
- World Bank Commodity Price Data
- CIRAD Price Data (in EUR)
YTD Q4/22 | YTD Q4/21 |
1 345 | 1 195 |
1 810 | 2 071 |
762 | 616 |
Contrary to the first nine months of the year, the last quarter of 2022 showed less volatility and prices were relatively stable. Palm oil was still gaining demand in the export domain and was priced very competitively compared to its rivals such as soybean oil and sunflower oil. As a result, exports were very good, particularly from Indonesia. All major importers took advantage of the reduction in prices and, active re-stocking was indicated by high inventories in the ports by the end of the year.
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As palm oil production was passing its peak season, by late November the market's attention was drawn to the South American soybean growing conditions. Brazil was heading for a record crop, albeit there have been some yield reductions as of late, but Argentina was suffering again from hot and dry La Niña conditions. Combined, this production could bring some temporary relief, but was not considered to be sufficient to reduce the global tightness in vegoils.
The biggest impact on the agricultural markets was coming from external factors. Petroleum was rather volatile on the back of recession fears, an energy crisis was happening in Europe, the US dollar lost some of its strength, the Ukraine war continued, and (food) inflation remained a global worry. Most of these factors had a negative impact on palm oil prices, but were the main movers and shakers in the fourth quarter.
The impact of changing export tariffs was, for once, very subtle, and the Domestic Market Obligation (DMO) was manageable. The price of palm oil recovered from USD 950 to USD 1 050 CIF Rotterdam during the last quarter.
The palm kernel oil (PKO) market remained rather subdued, as the oleochemical industry, a high-intense energy consumer, was suffering greatly due to increased energy costs. That lack of demand triggered short- term price discounts to palm oil, making PKO temporarily the cheapest popular vegetable oil in the world. It recovered from that dip, although it settled to only a small premium over palm oil. PKO prices hovered between USD 950 and USD 1 050 CIF Rotterdam mostly during the fourth quarter.
The natural rubber market finally showed some signs of awakening. China's demand was slowly coming back, and production was suffering from very wet conditions. However, new car sales numbers are still disappointing. Prices of Sicom RSS3 hovered from USD 1 400 per tonne to USD 1 500 per tonne, and physical interest increased slightly.
Banana consumption remained very dynamic over the last quarter and, due to a limited supply from Latin American sources, the spot market selling price on the European market continued its upward trend. This selling price also followed the general cost inflation on all production areas, where energy, inputs and logistics showed substantial increases.
1.3. Financial statements
2022 was marked by a record net recurring result, share of the Group, of KUSD 108 157, mainly due to historically high palm oil prices. The Group managed to eliminate its net financial debt, notwithstanding a continued expansion resulting in capital expenditures of KUSD 79 294 and the payment of a record dividend of KUSD 22 280 or EUR 2 per share in July 2022.
In addition, historical milestones were achieved, such as: sales exceeding USD 500 million, equity rising above USD 800 million and total assets surpassing USD 1 billion.
1.3.1. Consolidated income statement
Consolidated income statement
In KUSD (management presentation) | 31/12/2022 | 31/12/2021 |
Revenue | 527 460 | 416 053 |
Cost of sales | -308 198 | -249 240 |
Changes in the fair value | 1 769 | 2 404 |
Gross profit | 221 031 | 169 218 |
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General and administrative expenses | -43 424 | -36 891 |
Other operating income/(charges) | 705 | -4 552 |
Recurring operating result | 178 312 | 127 776 |
Financial income | 1 300 | 1 475 |
Financial charges | -3 803 | -3 096 |
Exchange differences | -3 251 | -1 157 |
Financial result | -5 754 | -2 779 |
Recurring result before tax | 172 558 | 124 996 |
Tax expense | -59 536 | -36 075 |
Recurring result after tax | 113 021 | 88 922 |
Share of results of associated companies and joint ventures | - 566 | -1 091 |
Recurring profit for the period | 112 455 | 87 831 |
Gain on sale PT Melania | 0 | 11 640 |
Result for the period | 112 455 | 99 471 |
Attributable to: | ||
- Equity holders of the parent - before sale of PT Melania | 108 157 | 82 746 |
- Equity holders of the parent - after sale of PT Melania | 108 157 | 93 749 |
Consolidated gross profit
In KUSD (condensed) | 31/12/2022 | % | 31/12/2021 | % |
Palm oil | 221 248 | 100.1 | 166 562 | 98.4 |
Rubber | -4 105 | -1.9 | -2 608 | -1.5 |
Tea | 195 | 0.1 | 134 | 0.1 |
Bananas and plants | 2 294 | 1.0 | 3 803 | 2.2 |
Corporate | 1 397 | 0.6 | 1 328 | 0.8 |
Total | 221 031 | 100.0 | 169 218 | 100.0 |
Total sales increased by 26.7% versus 2021 to USD 527 million.
Palm oil sales grew by 30.2%. The rise in volumes sold was mainly due to the significantly higher world market price for crude palm oil (CPO). In addition, the total tonnes of CPO produced increased by 5.1%.
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Sipef NV published this content on 16 February 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 16 February 2023 05:48:01 UTC.
