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DekelOil Production Rises 151%

Output was 35,770 tonnes of crude palm oil, a year on year increase of 151%; sales were up 156%.

DekelOil (LON:DKL) hailed an ‘excellent’ first full year of production for its Ayenouan palm oil plant in Côte d'Ivoire.

Output was 35,770 tonnes of crude palm oil, a year on year increase of 151%; sales were up 156%.

Kernal production was equally impressive at 6,221 tonnes, representing a year on year rise of 148%; sales almost doubled.

Dekel achieved €604 a tonne for its palm oil, down 7%. That said this still represents a premium to the benchmark Rotterdam-quoted price.

And with the impact of the unusually strong El Nino leading to low rainfall in south-east Asia, the traditional producing region, industry output is falling and prices are rising. This trend is expected to continue into the new year, Dekel said.

DekelOil director Lincoln Moore said the company would build on the success of 2015, with production expected to grow further.

He attributed the current success to a strong relationship with local growers who supply its 51%-owned Ayenouan operation. In particular the logistics have been very effective, he said.

As the business expands Dekel also plans to take more crop from the company-owned estate, which should boost its profit margins.

"Together with the recently announced €5.1 million reduction in debt, we are on course to realise the highly cash generative potential of our vertically integrated project at Ayenouan,” Moore said.  

Shares, up 28% in the last three months, advanced 3% to 1.28p each, valuing Dekel at £19.5mln.

The broker Cantor Fitzgerald reckons the stock has a lot further to go based on its 2p price target.

Repeating his 'buy' advice, analyst Adam Forsyth said: "The principal risk to this valuation would be further weakness in the CPO price. However the likely impact of El Nino on production in Malaysia and Indonesia suggest that pricing is more likely to firm into 2016."