First Resources Ltd’s Latest Earnings: What Investors Should Know

First Resources Ltd (SGX: EB5) reported its 2017 second quarter earnings last Friday.

As a quick background, First Resources is a producer of palm oil. The company organises its business into four major segments: crude palm oil; palm kernel; fresh fruit bunches; and refinery and processing.

You can catch the results from the company’s previous quarter here.

Financial highlights

The following’s a rundown on some of the financial figures for the second quarter:

1. Revenue was down 0.6% year-on-year, coming in at US$134.6 million.

2. Net profit attributable to shareholders for the period was US$23.2 million, down 11.4% year-on-year.

3. Earnings per share (EPS) fell to US$0.0146 in the reporting quarter, down 11.5% from the US$0.0165 seen in the same quarter a year ago.

4. Cash flow from operations was US$45.1 million and capital expenditure was US$14.4 million. First Resources thus generated free cash flow of US$30.7 million in the reporting quarter, an improvement from the negative US$18.8 million in free cash flow seen in the same quarter a year ago.

5. As of 30 June 2017, First Resources had US$303.8 million in cash and bank balances (note: a sum of US$132.2 million was earmarked as restricted) and US$467.9 million in debt. A year ago, it had US$180.9 million in cash and bank balances (note: a sum of US$117.8 million was earmarked as restricted) and US$527 million in debt.

In all, First Resources saw its revenue flatten out and profit decrease for the quarter. But, the palm oil producer generated good free cash flow for the quarter and presented a stronger balance sheet compared to a year ago.

First Resources declared an interim dividend per share of 1.25 Singapore cents, up from the interim dividend of 0.625 Singapore cents per share paid out last year.

Operational highlights and future outlook

The refinery and processing segment processed 191,172 tonnes in the reporting quarter, up from the 179,676 tonnes processed a year ago. Elsewhere, crude palm oil and palm kernel volumes rose 14.5% and 16.5% per year, respectively.

First Resources’ chief executive officer, Ciliandra Fangiono, shared the following comments in the earnings release regarding the company’s outlook:

“Given its attractive relative pricing against the other edible oils and continued low inventories in both producing and importing countries, demand for palm oil should remain stable.

In the longer term, the Indonesian biodiesel mandate and underlying demand growth from emerging markets will continue to underpin the positive outlook of the palm oil industry.”

First Resource’ shares closed at S$1.83 today. It traded at 12.8 times earnings and had a dividend yield of almost 2.0%.

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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 Chin Hui Leong doesn’t own shares in any companies mentioned.