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First Resources Q3 profit falls 28.5% on weaker palm oil prices

FIRST Resources on Tuesday posted a 28.5 per cent drop in net profit to US$27.9 million for its third quarter ended Sept 30, from US$39 million a year ago, mainly due to weaker palm oil prices.

Earnings per share stood at 1.76 US cents for the quarter, down from 2.46 US cents a year ago, according to the palm oil producer’s financials.

Sales fell 19.7 per cent to US$137.6 million from US$171.4 million a year ago, due to lower average selling prices, partially offset by higher sales volumes.

No dividend was declared for the quarter, unchanged from a year ago as the company generally considers dividend distribution on a half-yearly basis.

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The group said that production has picked up seasonally in the third quarter, which is shaping up to be the peak production quarter as output for the fourth quarter is expected to taper off.

"Continued concerns over slower palm oil supply growth, coupled with Indonesia’s B30 biodiesel mandate in 2020, may have contributed to the recovery in palm oil prices in recent weeks," the group said.

It believes the long-term fundamentals of the palm oil industry "remains positive" on tighter global supplies. This is amidst continued consumption growth from importing countries and strong biodiesel demand from Indonesia.

Shares of First Resources closed at S$1.73 on Monday, down three Singapore cents or 1.7 per cent, before the results were announced.