Given that many companies reported their financial results in the past few weeks, I thought it may be useful to summarise the results of some of these companies in three different buckets – positive, negative, mixed. Doing so will give our readers a quick overview of the performances of these companies.
With that, let’s focus on two of the companies that have delivered growth in their latest results.
First Resources Ltd (SGX: EB5) is the first company that has reported stronger performance recently.
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.
For the quarter ended 30 June 2018, revenue improved by 34.5% year-on-year to US$181.0 million. Similarly, operating profit was up by 34.6% year-on-year to US$56.5 million, driven mainly by higher sales revenue.
As a result, profit attributable to owners improved 55.2% year-on-year to US$35.9 million. The stronger performance was due to higher fresh fruit bunches yield in the quarter at 4.1 tonnes/hectare, up from 3.2 tonnes/hectare last year.
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 0.28x (31 December 2017: 0.21x).
First Resources’ CEO, 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.”
Bumitama Agri Ltd. (SGX: P8Z) is the other company that we will look at in this article.
As a quick introduction, Bumitama Agri is a palm oil producer. The company has over 180,000 hectares of plantation land located in three provinces in Indonesia, namely, Central Kalimantan, West Kalimantan, and Riau.
In its latest quarterly earnings update, Bumitama reported that sales revenue improved by 22.4% year-on-year to IDR 2, 349 billion. Similarly, gross profit for the quarter grew by 35.6% year-on-year to IDR 762 billion.
Profit attributable to shareholders improved by 36.1% year-on-year to IDR 388 billion. The strong performance was driven by higher fresh fruit bunches production, offset partially by weaker selling price. As of 30 June 2018, Bumitama Agri’s total borrowings stood at IDR 5, 214 billion, up from IDR 4,749 billion at end-2017. Meanwhile, its cash and cash equivalents improved from IDR 217 billion to IDR 333 billion.
The company also provided the following outlook:
“The increase in the supply of palm oil had led to low palm oil prices. The recent push by Indonesia to expand the usage of B20 biodiesel into all vehicles and heavy machineries would provide support to palm oil prices.
The Group anticipates improvement in its production volume to continue into the second half of 2018 which will help to mitigate the impact of low palm oil prices. The Group will continue to strengthen its business strategies, improve cost management and increase contribution from newly matured plantations.”
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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.