Recently, many companies report their fourth-quarter results as well as their full-year results for 2018 — some good, some bad. Here’s a look at two companies that reported weaker net profit in 2018.
First up is First Resources Ltd (SGX: EB5), 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 year ended 31 December 2018 (FY2018), First Resources reported that revenue fell by 2.1% year on year to US$633.5 million. Similarly, gross profit was down by 9.1% year on year to US$278.8 million, driven mainly by lower selling prices. As a result, profit attributable to owners declined by 12.9% year on year to US$120.0 million. Net debt increased from US$217.4 million as of 31 December 2017 to US$281.1 million as of 31 December 2018, with net gearing at 0.29 times (31 December 2017: 0.21 times).
First Resources is proposing a final dividend of 2.00 Singapore cents per share for FY2018, which will bring the full-year ordinary dividend to 3.25 Singapore cents per share.
Ciliandra Fangiono, CEO of First Resources, had this to say:
“Palm oil prices have started to recover from the lows of 4Q2018 on seasonally weaker output. Demand in the year ahead is expected to be supported by the extension of Indonesia’s biodiesel mandate in full force, as well as favourable changes to the import and export tax structures in consuming and producing countries. However, prices will continue to be impacted by macro developments such as the US-China trade negotiations and the supply-demand dynamics of other competing edible oils.”
Next up is Bumitama Agri Ltd. (SGX: P8Z), 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.
For the year ended 31 December 2018, Bumitama reported that sales revenue improved by 3.1% year on year to IDR 8,381 billion. Gross profit for the year was flat at IDR 2,391 billion. However, profit attributable to shareholders fell by 8.1% year on year to IDR 1,097 billion. The lower profit was due to a decline in sales prices, partially offset by higher fresh fruit bunches production volume. As of 31 December 2018, Bumitama Agri’s total borrowings stood at IDR 5,224 billion, up from IDR 4,749 billion at the end of 2017.
The company also provided the following guidance:
“CPO price has increased in January 2019, and is expected to maintain in the near future. This higher price will mitigate the lower seasonal fresh fruit bunches production in first quarter FY2019. The Group will continue to strengthen its business strategies, improve cost management and increase the contribution from young 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.