The palm oil and sugar producer, which pulled forward its results release from next week because of their shortfall below expected levels, said that rainfall at its main Papua New Guinea production area in the first six months of 2012 soared 48% to 259cm (101 inches).
Nick Thompson, the New Britain Palm Oil chief executive, said that besides "inhibiting our workers' ability to collect and transport" oil palm fruits, inundations "also result in the fruit absorbing more water, thereby reducing extraction rates at our mills".
The group, at 1.22m tonnes, processed 5.6% less palm fruit in the half than in the same period of 2011, with production of crude palm oil tumbling 11.3% to 236,188 tonnes.
'Unstable weather pattern'
The shortfall follows a caution last week from plantations group Sipef that its palm oil production in Papua New Guinea had shown a "small shortfall" because of "the unstable weather pattern… with excessive rains that have severely hampered harvesting and transport".
And New Britain Palm Oil said that the poor weather had also hampered shipments, leaving inventories 19,000 tonnes higher at the end of June than a year before besides, at its sugar operations, slowing the cane crushing season by one month.
Further hits had come from a fall in palm oil prices, which last week dropped to their lowest since October on the Kula Lumpur futures exchange, and in local sugar values, hurt by "continuing pressure from customers importing sugar directly" after Papua New Guinea lowered import duties.
The strength of Papua New Guinea's currency, the kina, had further boosted the attraction of sugar imports, while swelling New Britain Palm Oil's costs, in dollar terms, by an estimated $16.0m.
Palm oil price outlook
Mr Thompson, while terming the results "disappointing", held out hope for improvement, saying the group was "embarking on several cost saving initiatives" to revive margins, while noting falling freight, fertilizer and fuel prices.
"Operationally, we expect fresh fruit bunch production and oil extraction rates to normalise in 2013," he said.
Furthermore, palm oil prices looked set to stabilise at current levels of about $985 per tonne "in the near term.
The negative effects of "seasonally-high production period in Indonesia and Malaysia as well as slowing demand on the back of the European debt crisis and weaker growth in China" will be balanced by relatively low inventories, and poor production prospects for rival vegetable oil soyoil.
"The supply and demand fundamentals however in the global vegetable oils sector generally remain tight and unforeseen negative weather events could impact global yields and therefore pricing."
'Cheapest vegetable oil'
The comments tally with those last week from Sipef, which said that "we must bear in mind that the supply of palm oil will improve substantially during the second half of 2012, and so it is only the fear of a bad soybean crop that is lending it support.
However, "palm oil is more than ever the cheapest vegetable oil on the market as it currently stands at about $270 per tonne below soyoil.
"This will continue to keep palm oil a very competitive raw material and should ensure that its demand is supported during the last [half of 2012]."
New Britain Palm Oil unveiled earnings for the first half of $72.0m, on revenues down 9.4% at $366.0m.
In London, New Britain shares tumbled 21% to close at 655p, wiping some £250m ($330m) from its stock market value. source. agrimoney.com