Atiqah Mokhtar Published on Fri, Aug 13, 2021
First Resources has reported 1HFY2021 ended June earnings of US$32.6 million ($44.3 million), declining 16.7% y-o-y from US$39.1 million in 1HFY2020.
Revenue surged 48.4% y-o-y to US$412.9 million, boosted by strong production volumes and palm oil prices.
Following the higher revenue, First Resources’ gross profit jumped 51.9% y-o-y to US$173.3 million. Gross profit margins remained stable at 42%, compared to 41% for the corresponding period the previous year.
However, higher export taxes from the progressive export levy structure implemented in Indonesia since December 2020 resulted First Resources’s underlying net profit declining 28.4% y-o-y to US$30.1 million.
Effective July 2, Indonesia has reduced its export levies for palm oil products, which First Resources says will help to reduce the export tax burden for exporters in the second half of the year.
Under the revised levy structure, the incremental levy on crude palm oil (CPO) payable by exporters for every US$50 per tonne of increase in market CPO price was reduced from US$30 per tonne to US$20 per tonne, whilst the maximum levy payable for every tonne of CPO exported was lowered by US$80 per tonne.
As at 30 June, the group’s net gearing ratio stood at 0.19 times, with and cash and bank balances of US$205.3 million.
First Resources has declared an interim dividend of 1.25 cents per share.
During the period under review, the group’s production volumes came in strongly, with fresh fruit bunches (FFB) harvested increasing by 11.3% y-o-y to 1,623,915 tonnes in 1H2021 while CPO production rose 15.4% y-o-y to 428,408 tonnes. These were driven by overall yield improvements, with the group’s FFB yield increasing from 7.3 tonnes per hectare in 1H2020 to 8.2 tonnes per hectare in 1H2021 and CPO yield coming in at 1.9 tonnes per hectare in 1H2021 as compared to 1.7 tonnes per hectare in 1H2020.
The group expects its output growth to continue for the rest of the year as it enters the production up-cycle that typically takes place in the third and fourth quarters.
“Palm oil prices had been volatile during the first half of the year, driven by price movements in the rest of the vegetable oil complex and expectations of impending changes to the export levy structure in Indonesia. Since then, prices have rallied on supply concerns for palm and other edible oils and in anticipation of improved demand from the lowering of import taxes by India,” says Ciliandra Fangiono, CEO of First Resources.
“Looking ahead, palm’s attractive relative pricing against competing edible oils is expected to lend support to prices whilst the lower export levy in Indonesia will help to reduce the export tax burden for exporters in the second half of the year,” he adds.
Shares in First Resources closed 2 cents or 1.44% higher at $1.41 on August 12.