New Britain Palm Oil has poor first half

Investors gave New Britain Palm Oil a bashing on Wednesday after it reported a disappointing first half.

The firm saw pre-tax profits more than half to $63.6m, compared to the previous year.

Revenues fell to $366m, from $403.9m the year before, while earnings per share were down to 29.5c from 77.8c.

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Part of the problem was very high rainfall across all of the firm's operating sites but particularly in Papua New Guinea's West New Britain, the company's largest production base.

There rainfall was 48% higher in the period compared to the first half of 2011, which hindered farming and transport of materials.

However, the firm was also hit by lower prices for its palm kernel oil, which averaged $1,476 per tonne compared to $2,096 the year before, as well as adverse currency movements in Papua New Guinea.

It now intends to impose cost saving initiatives to counteract this impact and to help restore margins.

But the company warned prices could remain at current levels of approximately $985 per tonne in the near term given the seasonally high production period in Indonesia and Malaysia as well as slowing demand on the back of the European debt crisis and weaker growth in China.

"The supply and demand fundamentals...in the global vegetable oils sector generally remain tight and unforeseen negative weather events could impact global yields and therefore pricing," said Chief Executive Nick Thompson.

The firm's shares fell 9% in early trading following the announcement.