First Resources reports 1Q19 net profit dropped 56 percent as palm oil prices fell

A palm oil tree at a plantation in IndonesiaA palm oil tree at a plantation in Indonesia

First Resources reported Wednesday its first quarter net profit dropped 55.7 percent on-year to US$12.29 million on weaker crude palm oil (CPO) prices, partly offset by higher sales volumes.

UOB KayHia had estimated core net profit of US$10 million to US$12 million.

Sales for the quarter ended 31 March rose 10.4 percent on-year to US$149.61 million on higher sales volumes of palm-based products, the company said in a filing to SGX.

Average CPO prices (FOB Indonesia basis) were US$138 a tonne lower on-year, it said.

Fresh fruit bunches harvested fell by 8.8 percent on-year, while CPO production volumes declined by 9 percent, the company said.

While it said it expected first-half output to be lower on-year, it projected production would recover in the second half on seasonality.

The gross profit margin fell to 25.6 percent in the quarter, compared with 46.7 percent in the year-ago quarter, on lower average selling prices and increased purchases of palm-oil products from third parties, First Resources said.

Selling and distribution costs fell 27.2 percent on-year to US$9.05 million on lower export taxes, the filing said.

First Resources was positive in its outlook.

“Palm oil prices have been impacted by weakness in prices of competing vegetable oils, stemming from the U.S.-China trade tensions and concerns of over-supply in soybeans,” the company said.

“However, the fundamentals of the palm oil industry remain intact, propped by the implementation of Indonesia’s B20 biodiesel mandate, as well as impending plans for the roll-out of the B30 mandate,” it added.


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