DekelOil plc (LON:DKL) Executive Director Lincoln Moore caught up with DirectorsTalk for an exclusive interview to discuss exceeding production expectations and the outlook for the rest of 2015
Q1: Last time we spoke, I think you were outlining what you thought the production figures were going to be for the earlier part of this year, it would appear that you have actually exceeded those estimates?
A1: That’s exactly right. We did inform the market at the end of January that we’d produced around 2,160 tonnes of palm oil for that month and the production has continued to increase substantially. In February we produced 3,100 tonnes of CPO and in March we produced over 4,300 tonnes of CPO so overall for the quarter, we’ve produced over 9,600 tonnes which we think is roughly 1500-2000 tonnes higher than we initially expected.
Q2: Is this to do with the weather conditions or other conditions you can tell us about?
A2: I think it’s to do with 2 things, we did indicate in January that we felt we had in place all our logistics, all appropriate to deal with the round-up in production. We are also, from March onwards, going into a higher teen so we expect that the production in March of 4,300 tonnes will continue to be maintained or possibly be higher through April and May so for the half yearly, we’re looking at somewhere been 20,000-22,000 tonnes of CPO, our forecast for the year was 30,000 tonnes so we look like we’re on track to beat that forecast.
Q3: With crude palm oil, we have approached the best time of the year in terms of the growth or the production, is that right?
A3: There’s really 2 high season periods, one is March-June so we’ve done one month with March at 4,300 tonne and we’re expecting to see further growth over the next couple of months, and then we have a smaller high season at the back end of the year but judging on the run rates at the moment as I’ve said, we should be around about 22,000 tonnes by half year and certainly north of 30,000 tonnes we forecast for the year.
Q4: Has this new data changed your outlook for the company over the rest of this year in terms of the roadmap that you’ve forecast before?
A4: I think for us, at the end of January, it was really the moment where we felt the company turned into a long term viable business and clearly the significant growth in February and March has confirmed it that it is now a profitable long term business and for this year, we hope to continue organic growth as we first indicated but now we can have more certainty that that will take place. So yes, the plan otherwise in terms of immediate uplift on profitability apart from the crude oil production is from the kernel crushing plant which will still be on track to be operational by quarter 4.
Q5: And do you expect the market to start appreciating your efforts as well more than they have done to date?
A5: I think at some point it becomes a situation really where the market must. This year, looking at projects, EBITDA of around 5 million euros and next year with the continued growth which is now tracking well and the kernel crushing plant, we’re looking EBITDA of around 10 million euros. Based on today’s valuation of share price that makes us incredibly cheap in terms of where the stock price is today so I think when we release our next update, we’ll have surpassed last year’s production ahead of schedule as well and people can see that the interim profit number is going to be reasonable and I think we’ll start to see that value unlock pretty quickly.
Q6: Given what you’re doing, are you thinking of opening up any other areas that you have, I know you have a bit of a land bank there. Is that on the cards as well?
A6: We will certainly look at commencing operations in our second site in Guitry before the end of the year and clearly as I stated the kernel crushing plant will be significant profit contributor in 2016. We’re getting closer to looking at operations and possible developments in Ghana so we have a lot on our plate. I think the other area of real focus for us is the finance facilities and refinancing those on a much bigger term now the company has a stream of stable profitability that financers can see.
