First Resources reports 3Q18 net profit rose 22 percent on higher production volume

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First Resources reported on Friday that its third-quarter net profit rose 22.2 percent on-year to US$39.00 million on higher production volume, which was partly offset by lower palm oil prices.

Sales for the quarter rose 24.7 percent on-year to US$171.43 million, it said in a filing to SGX after the market close on Friday.

First Resources said fresh fruit bunches harvested increased by 18.1 percent on-year in the quarter to 982,653 tonnes, while crude oil production volume rose 25.2 percent on-year in the quarter to 242,924 tonnes.

Selling and distribution costs rose 36.6 percent on-year to US$15.51 million in the quarter, mainly on higher freight charges and export taxes, while general and administrative expenses increased 16.5 percent on-year to US$7.57 million, partly on higher employee-related costs, it said.

It reported gains on foreign exchange of US$3.9 million in the quarter, up from a gain of US$1.7 million in the year-ago quarter, mainly on the impact of foreign currency movements on monetary assets and liabilities of subsidiaries, First Resources said.

For the nine-month period, net profit rose 0.8 percent on-year to US$102.66 million, while sales increased 4.7 percent on-year to US$488.0 million, it said.

Outlook

First Resources issued a cautious outlook.

“Palm oil prices had been weak in the third quarter of 2018 and are expected to remain volatile in response to macro developments such as the U.S.-China trade tensions as well as changes to the import and export tax structures in consuming and producing countries,” the company said.

But it added, “On the biofuel front, demand for palm oil is expected to be supported by the extension of Indonesia’s biodiesel policy together with the favourable spread between gasoil and palm oil prices, which has resulted in palm-based biodiesel becoming more economically viable.”