Sipef (SIP) Q2 2024 earnings summary

Executive summary

• Focus on controlled growth as an upstream supplier of traceable, sustainable, high-quality palm oil and bananas, with ongoing diversification into targeted markets.

• Over 23,000 employees, 390,000+ tons of CPO produced, and $444 million in total sales for FY2023.

• 100% RSPO compliant and Rainforest Alliance certified.

• Palm oil production in Indonesia rose 4.9% year-over-year, but group-wide palm oil output fell 5.7% due to a 19.7% drop in Papua New Guinea following a volcanic eruption.

• Banana production in Côte d'Ivoire surged 30.6% year-over-year, driven by maturing new plantations.

Financial highlights

• Total sales for FY2023 reached $444 million.

• Revenue for H1 2024 was KUSD 204,542, a 6.4% decrease year-over-year.

• Gross margin for palm oil in June 2024 was $69.5 million, down 3% year-over-year; bananas gross margin rose 67% to $3.1 million.

• Operating result for H1 2024 was $45.6 million, down from $51.3 million in H1 2023.

• Free cash flow improved to $17.2 million from $3.8 million year-over-year.

Outlook and guidance

• Significant palm oil production increase expected in Indonesia in Q3/Q4, up 8% year-over-year; PNG production expected to be 17% lower.

• Group palm oil production forecasted to be roughly flat versus 2023.

• Banana production in Q3 expected to be 33% higher year-over-year; prices expected to remain ideal.

• Net recurring result at year-end expected to be slightly lower than last year.

• Over $100 million in CAPEX planned for 2024, with ongoing expansion in South Sumatra and new mill operational.