25/11/2010 (Agrimoney) - New Britain Palm Oil revealed plans to cash in further on the palm oil rally as the sustainable plantations group unveiled a 42% jump in profits for the first nine months of the year.

The Papua New Guinea-based company, which is listed in London, said it had sold 129,000 tonnes of palm-based oils for delivery next year, well below expected production levels, at $828 a tonne.

For 2012, the group, a champion of sustainable palm oil production, has sold 12,000 tonnes at $820 a tonne.

"However, the current higher price environment will allow [New Britain] the opportunity to add to the forward sales, and increase the average prices realised for such sales," the group's chief executive, Nick Thompson, said.

Palm oil prices in Rotterdam have jumped by some 40% this year with the near-term contract currently trading at about $1,100 a tonne.

In Kuala Lumpur, the benchmark February palm oil lot rose 3.4% to 3,276 ringgit a tonne on Thursday, spurred by data from cargo surveyors showing robust Malaysian exports of palm products at a time when rainfall is hampering production.

Extraction rates

New Britain said that its own output of crude palm and kernel oils had soared 22% to nearly 335,100 tonnes in the first nine months of the year, helped by the acquisition of the CTP business from Cargill and increased purchases from independent growers.

Palm fruit production from the company's own plantations had been "in line" with expectations, Mr Thompson said.

While the group acknowledged that wet weather had caused "slightly lower" oil extraction rates at all its mills, a rate averaging 22.13% compared with 22.65% a year before, the extra palm fruit production and higher prices helped revenues jump 49% to $355.3m for the nine months.

Pre-tax profits were, at $87.9m, up 42% year on year.

City reaction

In the City, the data were termed "strong" by Liberum Capital, which raised its forecast for New Britain earnings in 2011 and 2012.

"We believe the outlook for New Britain Palm Oil is very positive," the broker said, restating a "buy" recommendation in the company's shares.

"With respect to the remainder of 2010, the fourth quarter is historically the strongest quarter in terms of revenue and profitability… and this year, the company will be selling into significantly stronger [palm oil] prices than have been seen in the first nine months of the year."

New Britain shares closed 0.6% lower at 757.5p in London.