First Resources’ net profit falls by 26.4% to US$31.7m

On back of a decaying plantation division.

A delay in deliveries triggered a domino effect for the agribusiness company, resulting to a weaker sales volume. With muted sales, its plantation division’s performance also disappointed.

According to UOB Kay Hian, the division posted lower earnings, sinking by 11.6% yoy. However, a surge in its refining and processing division allowed First Resources to dodge the bullet.

“The division reported EBITDA of US$14.4m in 3Q15 (+100.0% qoq, +58.6% yoy). This was boosted by a much higher EBITDA margin of US$104.7/tonne due to the good timing in the execution of sales and purchases,” UOB Kay Hian said.

However, UOB Kay Hian warns that the company cannot keep on relying on surges in its refining in processing division to pick up its plantation slack.

“This trend is not likely to be sustainable. Meanwhile, we still expect a good margin in 4Q15 due to the wider price spreads between spot and future prices which is likely to benefit refiners and the better margins from the sale of biodiesel to Pertamina,” UOB Kay Hian said.

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