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10 Important 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 third quarter earnings. Let’s look at 10 important things from the earnings announcement that investors should know:

1. Revenue for the reporting quarter declined 9.3% year-on-year to US$137.4 million.

2. Quarterly operating profit fell by 16.7% to US$53.1 million compared to a year ago. This was caused by the lower revenue and a 20% jump in selling and distribution costs.

3. EBITDA (earnings before interest, taxes, depreciation, and amortization) for the reporting quarter declined by 10.7% to US$69.2 million compared to the same period last year.

4. Quarterly net profit attributable to shareholders declined 11.3% year-on-year to US$31.9 million as a result.

5. For the reporting quarter, the gross margin declined from 53.1% in 2016’s third quarter to 51.9%. Similarly, the EBITDA margin slipped from 51.1% last year to 50.3% this year.

6. In the reporting quarter, operating cash flow was US$53.8 million, a big drop compared to US$97.7 million in the third quarter of 2016. This was mainly due to the lower average selling prices experienced by First Resources, and the effects of an inventory build-up.

7. First Resources’ net borrowings (debt minus cash) increased slightly from US$189.6 million as of 31 December 2016 to US$200.6 million as of 30 September 2017.

8. For the reporting quarter, sales volume for First Resources’ crude palm oil increased by 12.2% year-on-year to 187,511 tonnes, while the sales volume of palm kernel grew 12.3% to 42,635 tonnes.

9. The company’s refinery and processing volume climbed 3.9% year-on-year to 193,458 tonnes for the quarter.

10. In its earnings release, First Resources had comments on its outlook:

“The Group’s financial performance in 9M2017 has been aided by production growth from its recovery from El Nino effects, albeit production grew at a slower pace in 3Q2017 as compared to the earlier quarters. Looking forward, we expect nucleus FFB production growth in 4Q2017 over 4Q2016 to be even slower.

 The industry’s weaker-than-expected output growth, restocking by importing countries and palm oil’s attractive relative pricing against other edible oils are expected to remain supportive of prices in the near term.”

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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.