FIRST Resources posted a 62.5 per cent drop in net profit to US$73.9 million for its second half year ended December, from US$197.2 million in H2 FY2022.

This came as profit from operations decreased by 57.7 per cent to US$101.7 million from both lower average selling prices and a reduction in overall sales volume, the palm oil producer said on Thursday (Feb 29). 

Earnings per share stood at US$0.0472 for the half year, down from US$0.1254 the previous year.

Sales slipped 23 per cent to US$531.8 million, reflecting weaker palm oil prices. The decline was also attributed to a reduction in overall sales volume as compared to the same period last year, where there was a large inventory drawdown, said the group.

A final dividend of S$0.037 per share was declared for the half year, down from S$0.12 the year before. The dividend will be paid on May 16, if approved at the Apr 26 annual general meeting, after the record date on May 10.

For the full year, net profit of US$145.4 million represented a decline of 55.3 per cent against FY2022. Profit from operations was down 52.6 per cent to US$198.1 million.

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While its performance was dragged down by weaker palm oil prices, an improvement in the overall sales volume in the year partially offset the impact. Sales for the year were down 20 per cent to US$980.6 million.

On the production front, the group recorded a new high of 3.6 million tonnes in fresh fruit brunches, with a strengthened yield of 18.4 tonnes per hectare (ha) as compared to FY2022.

While crude palm oil (CPO) production grew 8 per cent on the year from a recovery in purchases of third-party crops in 2023, CPO yield also increased to 4.2 tonnes per ha from 4.1 tonnes per ha.

The group highlighted its strong financial position with gross gearing ratio at 0.17 times, as well as cash and bank balance of US$162.9 million as at the end of December.

Ciliandra Fangiono, chief executive of First Resources, said that with the increase of global vegetable oil supplies, palm oil prices averaged lower year-on-year in 2023 and continued to be restrained by the relative pricing of competing oils.

“Looking ahead, global palm oil supply growth in 2024 is expected to be limited due to weather influences and the continued lack of new plantings across the industry. On the demand front, growing biodiesel mandates across the world, as well as Indonesia’s own B35 biodiesel mandate, are key drivers for global vegetable oil demand and consumption,” noted Fangiono, adding that the group will continue monitoring the macro uncertainties’ impact on market prices.

Shares of First Resources : EB5 0% closed Wednesday down 1.4 per cent, or S$0.02, to S$1.42.