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First Resources’ FY2023 net profit declines 55.3% y-o-y to US$145.4 mil on softer CPO prices

Khairani Afifi Noordin
Khairani Afifi Noordin • 3 min read
First Resources’ FY2023 net profit declines 55.3% y-o-y to US$145.4 mil on softer CPO prices
The effects of softer CPO prices were partially mitigated by an improvement in the overall sales volume. Photo: Bloomberg
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First Resources has recorded a net profit of US$145.4 million ($195.69 million) in its FY2023 ended December, a 55.3% decline against FY2022 with 52.6% decrease in profit from operations to US$198.1 million.

The company’s financial performance in FY2023 was impacted by weaker palm oil prices, with average crude palm oil (CPO) prices on a free-on-board Belawan basis declining from its historic high of US$1,239 per tonne in previous fiscal year to US$900 per tonne in FY2023.

The effects of softer CPO prices were partially mitigated by an improvement in the overall sales volume achieved by the company during the year. 

Reflecting the effects of weaker palm oil prices, sales dipped by 20% to US$980.6 million in FY2023. In the second half of the year, the decline was also contributed by a reduction in overall sales volume as compared to the same period last year, during which there was a large inventory drawdown.

Cost of sales for the year increased by 3.6% y-o-y to US$617.5 million.

Gross profit declined by 42.3% to US$363 million in FY2023 with gross profit margin coming in at 37%.

See also: Japan Foods sinks into $0.5 mil net loss for FY2024

On the production front, First Resources EB5 -

had a record production year in FY2023, with fresh fruit bunches (FFB) harvested reaching a new high of 3.585 mil tonnes — topping the previous year’s record of 3.57 million tonnes, and FFB yield strengthening to 18.4 tonnes per hectare in FY2023 as compared to 18.2 tonnes per hectare in FY2022. 

CPO yield increased from 4.1 tonnes per hectare in FY2022 to 4.2 tonnes per hectare in FY2023, while CPO production grew 8% year-on-year to 951,425 tonnes from a recovery in purchases of third-party crops during the year.

As at Dec 31, 2023, the company’s gross gearing ratio stood at 0.17x while cash and bank balance stood at US$162.9 million. 

See also: Stamford Land FY2024 earnings shrink 96.1% y-o-y on absence of divestment gains

The board has proposed a final dividend of 3.7 cents per share for FY2023, which brings the full year ordinary dividend to 6.2 cents per share.

“With the easing of tightness in global vegetable oil supplies, palm oil prices averaged lower year-on-year in 2023 and have continued to be restrained by the relative pricing of competing oils. Looking ahead, global palm oil supply growth in 2024 is expected to be limited due to weather influences and the continued lack of new plantings across the industry,” says First Resources CEO Cliniandra Fangiono.

“Amid global market uncertainties, the group will continue to monitor developments in the regulatory and macro environment, including the geopolitical tensions in the Middle East and Eastern Europe, and their resulting impact on market prices,” he adds.

Shares in First Resources closed 2 cents lower or 1.28% down on Feb 28 at $1.42.

 

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