First Resources Q4 profit falls 49.2% to US$17.3m; to pay out 2 S cents/share

PALM oil producer First Resources said net profit fell 49.2 per cent to US$17.3 million for the fourth quarter ended Dec 31, 2018, from US$34.2 million a year ago.

This was mainly from the effects of weaker palm oil prices and a net inventory build-up during the period, contributing to the decline in overall sales volumes compared with the year prior, the company said on Thursday in a regulatory filing.

Earnings per share (EPS) for the quarter came to 1.09 US cents, down from 2.16 US cents a year ago. Shares for the company last traded at S$1.71 apiece on Feb 27.

The group is proposing a final cash dividend of two Singapore cents per share. Together with the interim cash dividend of 1.25 cents per share, payout for 2018 will total 3.25 Singapore cents per share. Upon approval, this the payout date for the final dividend is May 16, 2019.

Last year, the company gave out an interim cash dividend of 1.25 Singapore cents per share, a final dividend of 2.15 cents, and a special dividend of 3.40 cents.

Sales for the company for the fourth quarter declined 19.5 per cent to US$145.5 million from US$180.8 million a year ago. Profit from operations was down by 54.1 per cent to US$27.4 million from US$59.8 million a year ago. Excluding net losses arising from changes in fair value of biological assets, First Resources said underlying net profit would have decreased by 44.6 per cent for Q4 to US$19.9 million. 

Full year net profit fell 12.9 per cent to US$120 million from US$137.7 million a year ago. EPS was at 7.58 US cents, down from 8.69 US cents a year ago. Meanwhile, net asset value per share stood at US$0.59, down from US$0.61 the year before.

Sales for the company for FY2018 dropped 2.1 per cent to US$633.5 million from US$647 million the year prior. According to the group, overall results were impacted by a net inventory build-up during the year, which resulted in a smaller increase in overall sales volumes than the growth in production volumes. In addition, the weak palm oil prices experienced by the industry also affected the group's average selling prices and earnings.

On the production front, the group's fresh fruit bunches (FFB) harvested grew by 13.1 per cent to 3.4 million tonnes in FY2018, driven by yield recovery and contribution from newly mature estates. Crude palm oil (CPO) production also grew 17.3 per cent to 823,679 tonnes in FY2018.

Excluding net losses arising from changes in fair value of biological assets, underlying net profit for the year would have decreased by 12.1 per cent to US$122.6 million, the group said.

On outlook, Ciliandra Fangiono, CEO of First Resources, said palm oil prices have started to recover from the lows of Q4 on seasonally weaker output. Demand in the year ahead is expected to be supported by the extension of Indonesia's biodiesel mandate in full force, as well as favourable changes to the import and export tax structures in consuming and producing countries.

"However, prices will continue to be impacted by macro developments such as the US-China trade negotiations and the supply-demand dynamics of other competing edible oils," Mr Fangiono added.