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First Resources' 1HFY2022 earnings surge nearly four times to US$128.0 mil due to stronger average selling prices

·3-min read

The group has declared an interim dividend of 2.50 cents per share for the 1HFY2022.

First Resources has reported earnings of US$128.0 million ($175.3 million) for the 1HFY2022 ended June, nearly four times higher than the earnings of US$32.6 million in the same period the year before.

Earnings per share (EPS) stood at 8.11 US cents on a fully diluted basis.

Total sales increased by 29.6% y-o-y to US$535.2 million due mainly to the higher average selling prices (ASPs) and offset by lower sales volumes from a build-up in inventory during the period.

Gross profit increased by 70.2% y-o-y to US$295.1 million with gross profit margin (GPM) increasing by 13.1 percentage points y-o-y to 55.1%. The higher gross profit and GPM were also boosted by the higher ASPs.

In the 1HFY2022, the group recognised a loss arising from changes in fair value of biological assets amounting to US$12.3 million, compared to the US$3.1 million gain in the same period the year before.

The fair value loss recorded in 1HFY2022 was mainly attributable to the lower fresh fruit bunches (FFB) prices used in the valuation as compared to Dec 31, 2021.

Selling and distribution expenses fell by 12.3% y-o-y to US$92.9 million mainly due to the lower sales volumes.

EBITDA increased by 141.1% y-o-y to US$230.3 million.

During the period, the group recorded gains on foreign exchange of US$5.5 million in 1HFY2022 as compared to US$6.4 million in 1HFY2021. The gains arose mainly from the impact of foreign currency movements on monetary assets and liabilities of the subsidiaries.

In the 1HFY2022, FFB yield remained stable at 8.2 tonnes per hectare with FFB harvested of 1.63 million tonnes as compared to 1.62 million tonnes in the same period last year.

Crude palm oil (CPO) production fell by 6.6% y-o-y to 400,159 tonnes in the 1HFY2022 due to a reduction in purchases of third-party crops, with CPO yield coming in at 1.8 tonnes per hectare.

Palm oil prices have been affected by macroeconomic uncertainties and government policy changes in Indonesia, culminating in the temporary export ban that drove CPO prices towards its historical highs.

“With palm oil’s attractive relative pricing against other competing edible oils encouraging replenishment of inventories by importing countries, we believe palm oil consumption demand should remain supportive,” says Ciliandra Fangiono, CEO of First Resources.

As at June 30, cash and cash equivalents stood at US$243.6 million.

The group has declared an interim dividend of 2.50 cents per share for the 1HFY2022, two times higher than the interim dividend of 1.25 cents per share declared in the year before. This year’s dividend is payable on Sept 8.

Shares in First Resources closed 2 cents lower or 1.38% down at $1.43 on Aug 11.

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