Dekel Agri-Vision (LON:DKL), a West Africa-based multi-commodity agricultural business, has released an encouraging production update for August 2024, signalling continued strength in its palm oil division. In a report, prepared by Zeus Capital, it highlights a solid year-on-year increase in crude palm oil (CPO) production volumes, providing optimism for a successful financial year.
Palm Oil Division Driving Positive Results
Dekel reported a 14.5% increase in CPO production compared to August 2023, with output reaching 1,621 tonnes. This growth is largely attributed to improved fresh fruit bunch yields and higher extraction rates, which were up by 70 basis points. While the overall production volumes were modest due to the annual low season, the year-to-date results indicate that Dekel is on track for a successful year. The pricing environment has remained favourable, with an average price of €780 per tonne, consistent with the previous month, though slightly below the exceptional highs seen last year.
Nick Spoliar, an analyst at Zeus Capital, commented on the results: “Today’s update continues to support expectations of a strong year for the palm oil division, with a combination of supportive pricing and volumes.” He added that the steady performance of the palm oil business sets a positive tone for the remainder of the year.
Cashew Business Anticipated to Boost Profitability
While the focus of this update was on the palm oil division, Dekel’s recently launched cashew business is expected to be a significant driver of profitability in the coming year. As production ramps up, analysts foresee a sharp rise in revenue from the cashew operation, which could underpin a major step-up in the company’s overall performance by 2025.
Charlie Cullen, also from Zeus Capital, expressed optimism about the cashew business, stating that the project could “drive a step-change in profitability as it reaches full capacity next year.” Investors are eagerly awaiting further updates on this front in the months ahead.
Financial Forecasts Remain Positive
With both palm oil production performing strongly and cashew production set to increase, Dekel has left its full-year forecast for 2024 unchanged, with an anticipated €4.0m EBITDA from the palm oil division alone. The steady pricing and production output are expected to support good margins, ensuring the company remains profitable throughout the year.
On a Final Note
Dekel Agri-Vision’s August update reinforces the company’s steady trajectory of growth, particularly within the palm oil sector. With the promising cashew business likely to enhance overall profitability in the coming years, Dekel is well-positioned for continued success. As highlighted by Zeus Capital’s analysts, the combination of supportive pricing, strong production volumes, and a positive financial outlook makes Dekel Agri-Vision a company to watch in the agricultural sector.
