PALM oil producer First Resources : EB5 0% reported net profit of US$71.5 million for the first half of its fiscal year ended June, down 44.1 per cent from US$128.0 million in the previous year, amid a decline in sales and lower gross margins.

Earnings per share fell to US$0.0456, from US$0.0811 in H1 FY2022.

An interim dividend of S$0.025 per share was declared for the period, unchanged from the previous year. It will be paid out to shareholders on Sep 7.

The group’s sales for H1 fell 16.1 per cent to US$448.8 million from US$535.2 million previously, mainly attributable to lower selling prices which were offset in part by increased sales volumes led by crude palm oil (CPO).  

Chief executive Ciliandra Fangiono said the lower selling prices were a result of moderation from record high palm oil prices in the first half of last year.

“Looking ahead, prices in the near to mid-term are expected to be influenced by the geopolitical situation in the Black Sea, as well as the anticipated weather impact of El Nino on the output of palm and other competing oils,” he added.

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In line with higher sales volumes, cost of sales grew 21.5 per cent on the year to US$291.8 million, leading to a 20.1 percentage-point fall in gross profit margin for the period to 35 per cent.

First Resources also recorded a US$12.1 million loss on foreign exchange, compared with a US$5.5 million gain in the same period a year earlier. This was mainly due to the impact of foreign currency movements on monetary assets and liabilities of its subsidiaries.

In terms of production, the group harvested 1.56 million tonnes of fresh fruit bunches, declining 4.5 per cent to 1.63 million tones in the previous year.

CPO production on the other hand recorded a 1.6 per cent increase to 406,648 tonnes in H1 FY2023, from 400,159 tonnes in the year before, as yields remained stable at 1.8 tonnes per hectare.

Palm kernel production fell 0.9 per cent year on year to 88,234 tonnes from 89,061 tonnes previously.

First Resources said it expects its production to pick up seasonally in the second half of the year.

Shares of the group ended Friday 2.5 per cent or $0.04 lower at S$1.54.