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First Resources Ltd’s Latest Earnings: Revenue and Profit Are Up Over 20%

Last Friday, First Resources Ltd (SGX: EB5) released its 2018 third-quarter results.

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.

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Here are 10 quick points on First Resources’ latest earnings update:

  1. For the latest quarter ended 30 September 2018, revenue was up by 24.7% year-on-year to US$171.4 million.
  2. Operating profit was up by 12.9% year-on-year to US$59.9 million, driven mainly by higher sales.
  3. Net profit attributable to owners improved 22.2% year-on-year to US$39.0 million.
  4. EBITDA (earnings before interest, tax, depreciation and amortization) for the quarter improved by 10.5% year-on-year to US$76.4 million.
  5. Gross margin percentage for the quarter declined to 48.7%, down from 51.9% a year ago. Over the same period, EBITDA margin percentage narrowed from 50.3% to 44.6%.
  6. For the first nine months of 2018, net cash generated from operating activities was at US$98.8 million, down from the US$164.8 million generated over the same period last year. Cash flow from operations was dragged down by negative working capital movements.
  7. Net debt increased from US$217.4 million at the end of 2017 to US$263.2 million as at 30 September 2018. Over the same period, with net gearing at 0.28x (31 December 2017: 0.21x).
  8. Plantation and palm oil mills revenue was up 14.2% year-on-year to US$148.4 million while refinery and processing revenue was up by 36.3% year-on-year to US$164.7 million.
  9. The average plantation age was 11 years, as of 30 September 2018.
  10. The company also provided its outlook for the next 12 months:

“Palm oil prices had been weak in 3Q2018 and are expected to remain volatile in response to macro developments such as the US-China trade tensions as well as changes to the import and export tax structures in consuming and producing countries.

On the biofuel front, demand for palm oil is expected to be supported by the extension of Indonesia’s biodiesel policy together with the favourable spread between gas oil and palm oil prices, which has resulted in palm-based biodiesel becoming more economically viable.”

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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.