First Resources Q1 net profit soars 80.9% to US$22.2m

INDONESIAN palm oil producer First Resources saw an 80.9 per cent surge in net profit to US$22.2 million for its first quarter ended March 31, from US$12.3 million a year ago. 

This was boosted by higher average selling prices during the quarter as compared to last year, the mainboard-listed firm said on Friday. 

Earnings before interest, taxes, depreciation, and amortisation (Ebitda) also came in stronger at US$53.7 million in Q1, up 38.4 per cent from US$38.8 million a year earlier. 

Meanwhile, sales dipped by 6.2 per cent to US$140.4 million from US$149.6 million last year, due to a decline in sales volumes. 

Overall sales were impacted by lower purchases of crude palm oil (CPO) from third parties, as well as a net inventory build-up of 8,000 tonnes in Q1, as compared to a drawdown of 17,000 tonnes in the year-ago period, First Resources said. 

As at March 31, 2020, equity attributable to owners of the company fell 19.6 per cent to US$839.2 million, mainly due to the foreign currency translation losses arising from the depreciation of the Indonesian Rupiah against the US dollar during the quarter.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

That said, the group noted that its financial position remains "healthy", with net gearing ratio at 0.31 times and cash and bank balances of US$103.9 million as at March 31.

According to First Resources, Covid-19 has affected demand in major markets like China and India, impacting CPO prices which have since fallen over 30 per cent from their peak in January this year, and prices are expected to remain weak in the short to medium term.

In the longer term, while Indonesia's B30 biodiesel mandate has been one of the key demand drivers for palm oil, faltering oil prices and lower fuel consumption may present challenges to the programme, the company said. 

Nonetheless, as palm oil is a staple used in dining establishments and food processing industries, a recovery in palm oil demand may be expected as lockdown measures ease globally, it added. 

First Resources shares closed at S$1.30 on Thursday, up S$0.02 or 1.6 per cent.