First Resources has reported a net profit of US$8.8 million ($11.7 million) for the 1QFY2021 ended March, 60.5% lower y-o-y from US$22.2 million previously, caused by higher export taxes.
The decline in net profit comes despite an increase in sales for the period by 40.3% y-o-y from $140.4 million to $196.9 million due to stronger sales volumes from the recovery in production volumes and yields.
The higher export taxes follow the implementation of a new levy structure in Indonesia since December 2020. Under the new structure, the levy payable by exporters for every tonne of CPO exported was increased from a flat rate of US$55 per tonne to a progressive system wherein the levy increases by US$15 per tonne for every US$25 per tonne of increase in market CPO price. The export levy amounts also vary depending on product type, with that for processed products lower than that for CPO.
To that end, First Resources saw an EBITDA of US$41.5 million for the 1QFY2021, down 22.7% y-o-y from US$53.7 million previously.
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Equity attributable to owners of the company decreased by 2.6% from US$1.06 billion as at Dec 31, 2020 to US$1.04 billion as at March 31, mainly due to the foreign currency translation losses arising from the depreciation of Indonesian Rupiah against United States Dollar during the quarter.
First Resources’ net gearing ratio stood at at 0.18 times as at March 31, with US$250 million in undrawn committed unsecured credit facilities available, which may be utilised for refinancing of the Islamic medium term notes due in October as well as the group’s general corporate purposes.
In terms of its outlook, First Resources states that a recovery in yield is expected to underpin overall output growth for the year. “Whilst palm oil prices have rallied and are expected to remain supportive, our 1H2021 results may not be able to enjoy the upside from subsequent increases in market CPO prices due to forward sales entered into previously, whilst having to bear the higher export levies from the higher market CPO prices,” the group says.
Nonetheless, on a full-year basis, the group expects some price upside from remaining unhedged volumes, especially in 2H2021 which is also expected to be seasonally stronger in terms of production volumes.
Shares in First Resources closed 5 cents or 3.31% lower at $1.46 on May 14.
