UPDATE 2-New Britain doubles profit from palm oil

(Adds director, analyst comments, background, share price)

LONDON, May 14 (Reuters) - New Britain Palm Oil NBPO.L doubled quarterly profits and underlined plans to double acreage over the next seven years in anticipation of strong palm oil prices, the Australasia-focused planter said on Wednesday.

First-quarter pretax profits for the period to May 13 doubled to $37 million as sales rose 63 percent to $83 million, Papua New Guinea’s largest palm oil producer said.

New Britain has doubled in value since its December listing giving it a current market value of 790 million pounds ($1.54 billion). Its performance compares with a 3.7 percent decline in the FTSE All Share .FTAS index in 2008.

With no debt, about $50 million in cash and a share price that’s a shade off its March peak of 600p, the company is on track to double acreage by 2015, Executive Director Alan Chaytor told Reuters.

New Britain has about 40,000 hectares of plantation estates on Papua New Guinea and the Solomon Islands -- a size it can easily double in surrounding areas, Chaytor said.

Additional estates could come from acquisitions in Malaysia and Indonesia, the world’s two top producers of the edible oil, he said, adding that palm oil prices are expected to stay strong in the medium to long-term.

“The supply, demand factors still remain,” Chaytor said. “The world is still hungry and food demand is still very strong from the emerging economies. We see quite a few years of impressive pricing.”


New Britain will consider “opportunistic” mergers and acquisitions to grow, the firm has said.

But even doubling its size still makes it a minnow among global players like Singapore's Wilmar International WLIL.SI, which has 570,000 hectares and Malaysia's Sime Darby SIME.KL, with 525,000 hectares.

New Britain said it averaged $954 per tonne for crude palm oil in the first quarter and at the end of April had about 99,000 tonnes of oil sold or priced forward for 2008 at an average price of $1,020 per tonne.

“New Britain’s trading statement reads very positively and we can expect another terrific year,” said Ambrian analyst Richard Lucas.

“Unlike the other palm oil producers quoted in the UK the company has no export taxes to pay, so on the majority of production not sold forward it will benefit from the entire palm oil price rise.”

The price of palm oil, used as a cooking oil and in products ranging from cosmetics to cookies and biofuels, has almost doubled since the start of 2007 on surging demand from the food and fuel sectors.

Shares of New Britain trade at 18 times current-year earnings, more expensive than smaller London rivals Anglo Eastern ANEA.L and MP Evans MPE.L but still cheaper than REA Holdings REAH.L.

“New Britain is set to show the strongest profit growth of the four companies,” Ambrian’s Lucas added.

“The share price has continued to perform well, but with palm oil prices still so strong we think the shares, and indeed the sector, still offer reasonable value.

New Britain, whose shares were up 1.5 percent to 550.5 pence by 1152 GMT, is 51-percent-owned by Kulim Bhd KULM.KL, a Malaysian government-controlled company. (Reporting by Hsu Chuang Khoo; editing by Elaine Hardcastle)