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3 Things Investors Should Know About First Resources Ltd’s Latest Earnings

First Resources Ltd (SGX: EB5) is an integrated palm-oil producer. It manages more than 200,000 hectares of oil-palm plantations across the Riau, East Kalimantan, and West Kalimantan provinces of Indonesia.

Two weeks ago, First Resources reported its 2017 first quarter earnings. Let’s take a look at three useful pieces of information investors may want to know from the announcement:

1. The overall result

The following table shows some important numbers from First Resources’ income statement for the first quarters of 2017 and 2016:


Source: First Resources 2017 first quarter earnings presentation

It’s obvious that First Resources saw strong growth in the first quarter of 2017. The company’s revenue was up 71.6%, while its net profit had jumped nine-fold. First Resources’ business performance was driven mainly by higher CPO (crude palm oil) prices and higher sales volumes.

2. Operational statistics

First Resources’ operational statistics are just as important as its financial numbers. Here’s a table showing the company’s plantation-related figures and the efficiency of its factory operations:


Source: First Resources 2017 first quarter earnings presentation

We can see that First Resources’ production levels and factory-efficiency have both improved (in fact, some numbers showed dramatic improvement) in the first quarter of 2017. The company had benefitted from a recovery from the El Nino weather phenomenon.

3. What lies ahead

As investors, we rely on many tools, including management’s forecasts, to help us gain insight on what to expect for the near- to long-term performance of our investments’ businesses.

With regard to First Resources, this is what the company said about its future in its earnings release:

“Prices have moderated since early 2017 on improving supply prospects for palm oil and other edible oils as well as muted demand. Lower prices are expected to persist as production continues to recover especially in the second half of 2017.

The Group’s production growth has been strong since 4Q2016, and yield recovery is expected to continue for the rest of the year. However, after the strong production in 1Q2017, production in 2Q2017 is expected to slow down before recovering in 2H2017.

The longer term fundamentals of the industry remain positive, underpinned by the Indonesian biodiesel mandate and underlying demand growth from emerging markets.”

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.