FERONIA INC. REPORTS Q3 2014 RESULTS
TORONTO, ONTARIO--(Marketwired - Nov. 28, 2014) - Feronia Inc. ("Feronia" or the "Company") (TSX VENTURE:FRN) today released its unaudited financial results for the three and nine months ended September 30, 2014. All amounts in this release are expressed in US dollars unless otherwise indicated.
Q3 2014 Highlights
- Produced 3,071 tonnes of Crude Palm Oil ("CPO") (Q3 2013: 1,694 tonnes) from 16,725 tonnes of fruit (Q3 2013: 9,280 tonnes), a year-over-year increase of 81%
- Revenue of$2.9 million (Q3 2013:$2.3 million) including from the sale of:
- 3,040 tonnes of CPO at an average price of $766 per tonne (Q3 2013: 2,560 tonnes at $827 per tonne)
- 196 tonnes of Palm Kernel Oil ("PKO") at an average price of $1,097 per tonne (Q3 2013: 193 tonnes at $784 per tonne)
- Fresh fruit bunch ("FFB") yield of 1.7 tonnes per ha (Q3 2013: 1.6 tonnes per ha).
- Oil extraction rate ("OER") of 18.36% (Q3 2013: 18.25%)
- Replanted 1,396 hectares ("ha") of oil palm (Q3 2013: 1,996 ha)
- Production at Yaligimba significantly improved as rehabilitation continues
- Appointment of new CEO, Xavier De Carniere
- Net loss attributable to Feronia was $(5.6m) or $(0.10) per share, compared to a loss of $(2.9m) or $(0.10) per share in Q3 2013
- 4,536 ha of oil palm has been replanted in the year to date
- New Collective Agreement addressing pay, benefits, and other terms and conditions of employment signed on November 13, 2014, with the six unions which represent the Company's over 3,600 employees of its palm oil business
- Partnership with MASS Design Group to assess and redesign the social infrastructure announced on November 20, 2014.
Gross losses in the quarter were up $1,352,000 compared to the same period last year. This increase was largely due to cost of sales in 2013 benefitting from a credit of $1,200,000 resulting from the reversal of a CPO inventory provision. In the nine months ended September 30, 2014, gross losses increased $2,067,000 to $3,336,000 (2013: $1,269,000). Of this $850,000 was due to the benefit from a credit from the reversal of the inventory provision made at the end of 2012. The remainder of the increase was driven by higher production levels in 2014 which is largely due to the re-commencement of production from the Company's Yaligimba plantation. As a result of the high percentage of immature and young palms in the Company's plantations, the average yield per hectare is low and the cost of production currently exceeds revenue. As the plantations mature and more hectares come into production, the Company's cost of production on a per tonne basis is expected to decline substantially.
During Q3 2014, the Company produced 16,725 tonnes of FFB and 3,071 tonnes of CPO, representing an improvement against Q3 2013 of 80% and 81% respectively. For the nine months ended September 30, 2014, the Company produced 52,214 tonnes of FFB and 9,582 tonnes of CPO, representing an improvement against the corresponding period in 2013 of 52% and 50% respectively. The majority of the improvements relate to production from Yaligimba which made no contribution during the same time period in 2013.
The Company is now seeing the benefits of the rehabilitation work, primarily focused on improving access for harvesting, being carried out at Yaligimba, with CPO production per hectare for Q3 2014 in line with that at Lokutu.
Although the Company realised lower FFB yields for the nine months ended September 30, 2014 (5.4 tonnes/ha) than during the nine months ended September 30, 2013 (5.8 tonnes/ha), quarter on quarter improvements are being derived from the rehabilitation work being undertaken at Yaligimba and the Company expects Yaligimba to soon match Lokutu in per ha productivity.
There are three factors which currently restrict overall performance:
- Young age profile of plantation.
10.7% of the palms harvested in the nine-months ended September 30, 2014 were in their first year of production and therefore low yielding. The large percentage of immature palms in our plantations will continue to negatively impact our average yield for the next several years. Normal course maturation of our plantations will result in substantially improving yields over time. Moreover, management is increasing its focus on fertilisation of young palms to improve early yields.
- Processing capacity limitations at the Lokutu mill. The bottleneck will be removed by the installation of a new boiler expected in the first half of 2015.
- Nutrient deficiencies at Boteka Plantation continued to impact yields. Fertiliser, ground limestone and guano are being applied to correct the deficiencies and, combined with a normal course fertiliser and soil maintenance regime, we anticipate improvements in yields in 2015.
Replanting of oil palms commenced in March 2014 in line with rainfall patterns, with 1,396 ha planted in Q3 2014 (Q3 2013: 1,996 ha) and 3,255 ha replanted as at September 30 2014 (September 30, 2013: 4,448 ha). As at November 28, 2014, the Company had replanted 4,536 ha in the current year and in excess of 15,000 ha since it acquired PHC in 2009. As at November 28, 2014, Feronia's oil palm nurseries were sufficiently stocked to complete the Company's planned 2015 replanting target of 3,500 hectares.
Due to the additional rehabilitation work required at Yaligimba and the resulting redeployment of the workforce, the Company has revised its replanting target for 2014 from 5,000 hectares to 4,500 hectares. Having met the target, replanting has now stopped.
Ravi Sood, Chairman of Feronia Inc. commented: "We have seen a significant improvement in performance at Yaligimba during the quarter as the extensive rehabilitation work being carried out enables increased production. Against the backdrop of our increasing production, we are very pleased to see several new palm oil consumers commence operation in the DRC, a positive reflection of the large and growing domestic demand. We are starting to see a positive impact on pricing and expect this trend to continue.
"Although we continue to experience normal course challenges typical of our industry, we are seeing our aggressive planting and rehabilitation programme translate into increased production, efficiencies, and economies-of-scale. We expect this trend to accelerate in the coming years as our large and expanding portfolio of young palms mature and increasingly contribute to improving volumes and declining production costs."
About Feronia Inc.
- Feronia Inc. is a large-scale commercial farmland and plantation operator in the Democratic Republic of the Congo ("DRC").
- The Company uses modern agricultural practices to operate and develop its oil palm plantations and arable farming business division.
- Feronia believes in the immense agricultural potential of the DRC for high-quality foodstuffs and edible oils given its ideal climate, excellent soil and highly skilled and experienced workforce.
- Feronia's management team is comprised of senior agriculturalists with extensive experience in managing both plantations and large-scale mechanized farming operations in emerging markets.
- Feronia is committed to sustainable agriculture, environmental protection and providing support for local communities.
- For more information please see www.feronia.com
Except for statements of historical fact contained herein, the information in this press release constitutes "forward-looking information" within the meaning of Canadian securities law. Such forward-looking information may be identified by words such as "anticipates", "plans", "proposes", "estimates", "intends", "expects", "believes", "may" and "will". There can be no assurance that such statements will prove to be accurate; actual results and future events could differ materially from such statements. Factors that could cause actual results to differ materially include, among others: risks related to foreign operations (including various political, economic and other risks and uncertainties), the interpretation and implementation of the"Loi Portant Principes Fondamentaux Relatifs A L'Agriculture", termination or non-renewal of concession rights or expropriation of property rights, political instability and bureaucracy, limited operating history, lack of profitability, lack of infrastructure in the DRC, high inflation rates, limited availability of debt financing in the DRC, fluctuations in currency exchange rates, competition from other businesses, reliance on various factors (including local labour, importation of machinery and other key items and business relationships), the Company's reliance on one major customer, lower productivity at the Company's plantations and arable farming operations, risks related to the agricultural industry (including adverse weather conditions, shifting weather patterns, and crop failure due to infestations), a shift in commodity trends and demands, vulnerability to fluctuations in the world market, the lack of availability of qualified management personnel and stock market volatility. Details of the risk factors relating to Feronia and its business are discussed under the heading "Risks and Uncertainties" in Feronia's annual Management's Discussion and Analysis for the year ended December 31, 2013, a copy of which is available on the Company's SEDAR profile at www.sedar.com. Most of these factors are outside the control of the Company. Investors are cautioned not to put undue reliance on forward-looking information. Except as otherwise required by applicable securities statutes or regulation, the Company expressly disclaims any intent or obligation to update publicly forward-looking information, whether as a result of new information, future events or otherwise.
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