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10 Quick Things Investors Should Know From First Resources Ltd’s Latest Earnings

In late February, First Resources Ltd (SGX: EB5) released its 2017 fourth quarter and full year earnings update.

As a quick introduction, First Resources is an integrated palm oil producer. It manages over 210,000 hectares of oil palm plantations across the Riau, East Kalimantan and West Kalimantan provinces of Indonesia.

Here are 10 things investors should know about First Resources’s latest results:

1. Revenue for the quarter improved by 3.2% year-on-year to US$180.8 million.

2. EBITDA (earnings before interest, taxes, depreciation, and amortisation) for the reporting quarter declined by 14.4% from a year ago to US$78.2 million.

3. In the fourth quarter of 2017, operating profit fell by 31.8% year-on-year to US$59.8 million, driven mainly by higher costs.

4. Consequently, First Resources’ net profit attributable to shareholders sank by 41.1% year-on-year to US$34 million.

5. The gross margin for the reporting quarter declined from 54.5% in 2016’s fourth quarter to 47.6%. Similarly, the EBITDA margin declined from 52.2% to 43.3%.

6. First Resources generated operating cash flow of US$66.9 million in the fourth quarter of 2017, up 10% compared to US$60.7 million seen in 2016’s fourth quarter.

7. As of 31 December 2017, First Resources’ net borrowings stood at US$217.4 million, up from from US$189.6 million at end-2016. The net gearing also increased from 0.20 to 0.21 as a result.

8. In the fourth quarter of 2017, the Plantation and Palm oil Mills segment saw its revenue decline by 7.6% year-on-year to US$151.5 million. The Refinery and Processing segment did much better, with revenue up by 8% year-on-year to US$169.5 million.

9. For the reporting quarter, the company’s sales volume of crude palm oil declined by 2.3% year-on-year to 207,266 tonnes whereas palm kernel’s volume increased marginally by 0.2% to 49,672 tonnes. The sales volume at the Refinery and Processing segment climbed 14.3% to 263,783 tonnes.

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

“The Group’s operational performance in 2017 was boosted by yield recovery from El Nino effects and increase in mature hectarage. Looking ahead, the Group anticipates its production volume growth to extend into 2018 from continued yield recovery and contribution from newly mature plantations.

While higher industry production volumes and competition from other edible oils are expected to influence palm oil prices, improving crude oil prices and potential domestic demand growth in Indonesia from its biodiesel mandate policy may lend some support to prices.”

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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.