Last week, First Resources Ltd (SGX: EB5) released its second quarter results for the year ending 31 December 2018. As a quick introduction, First Resources is an integrated palm oil producer, managing more than 200,000 hectares of oil palm plantations across the Riau, East Kalimantan and West Kalimantan provinces of Indonesia.
In this article, let’s have a quick overview of First Resources’ latest earnings update:
1. For the second quarter ended 30 June 2018, sales revenue was up by 34.5% year-on-year to US$181.0 million.
2. Operating profit grew by 34.6% year-on-year to US$56.5 million, driven mainly by higher sales revenue.
3. Net profit attributable to owners improved by 55.2% year-on-year to US$35.9 million.
4. EBITDA (earnings before interest, tax, depreciation and amortisation) for the quarter rose by 29.4% as compared to the same period last year to US$73.9 million.
5. Gross margin improved from 42.6% last year to 43.4% this year. Yet, EBITDA margin declined from 42.5% to 40.8%.
6. Year-to-date, net cash generated from operating activities was US$48.4 million as compared to US$110.9.6 million in the corresponding period last year, driven by lower net profit and negative working capital movements.
7. Net borrowings increased from US$217.4 million, as at 31 December 2017, to US$268.5 million, as at 30 June 2018, with net gearing at 0.28 times (31 December 2017: 0.21 times).
8. Segment wise, plantation and palm oil mills revenue was up 18.2% year-on-year to US$128.8 million while refinery and processing revenue was up by 34.9% year-on-year to US$172.7 million.
9. The average plantation age was at 11 years as at 30 June 2018.
10. First Resources’ chief executive, Ciliandra Fangiono, commented:
“Several recent macro developments are expected to continue their influence on palm oil prices, amongst which are India’s import duty hikes on palm oil and other edible oils as well as China’s imposition of import tariffs on US soybeans. On the biofuel front, the positive spread between gasoil and palm oil prices together with the push for higher biodiesel blending by the Indonesia government is envisaged to be supportive of biodiesel demand.”
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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.