SINGAPORE (Nov 12): First Resources saw a 28.5% drop in its latest 3Q19 earnings, which came in at US$27.9 million ($38.0 million), compared to US$39.0 million in 3Q18.
This came on the back of a 19.7% fall in sales to US$137.6 million from US$171.4 million a year ago.
The revenue decline was mainly due to lower sales contribution from all the groups segments – plantations and palm oil mills; refinery and processing; and inter-segment elimination – which saw lower average selling prices. But this was partially offset by higher sales volume.
The plantations and palm oil mills segment saw an 18.5% y-o-y drop in sales to US$121.0 million, with lower contribution from crude palm oil and palm kernels, but contribution from fresh fruit branches increased by 27.0% y-o-y to US$3.9 million.
Meanwhile, the refinery and processing segment was 21.5% lower at US$129.4 million, and the inter-segment elimination segment managed to narrow losses by 20.4% to US$112.8 million.
Gross profit for 3Q19 came in at US$63.5 million, 23.9% lower than US$83.5 million last year, with cost of sales declining 15.8% y-o-y to US$74.1 million.
Selling and distribution costs decreased by 20.3% y-o-y to US$12.4 million, while general and administrative expenses were 3.4% lower at US$7.3 million.
During the quarter gains from foreign exchange were 84.1% lower at US$0.6 million, mainly from the impact of foreign currency movements on monetary assets and liabilities of the subsidiaries.
As at Sept 31, the group’s cash and cash equivalents stood at US$77.3 million.
In this quarter, the group’s production has picked up seasonally, which is shaping up to be the peak production quarter as output for 4Q19 is expected to taper off from the third quarter.
In terms of palm oil prices, there has been some recovery in the recent weeks, mainly attributable to continued concerns over slower palm oil supply growth, coupled with Indonesia’s B30 biodiesel mandate in 2020.
Nonetheless, the group believes the long-term fundamentals of the palm oil industry remains positive on tighter global supplies amidst continued consumption growth from importing countries and strong biodiesel demand from Indonesia.
As at 11.10am, shares in First Resources are trading 2.89% higher at $1.78.
