First Resources posts US$22 million first quarter profit

The Indonesia-based plantation operator's strong start to the year is unlikley to be repeated in Q2.

Palm oil producer First Resources has posted a surging net profit over the first quarter of 2020, with US$22.2 million in earnings, up 80.9% on the same period in 2019.

Earnings before interest, taxation, depreciation and amortization, also came in stronger at US$53.7 million, 38.4% higher as compared to a year ago.

The group’s improved financial results came in spite of the COVID-19 pandemic, and were boosted by higher average selling prices throughout the quarter.

Sales volumes decreased, with lower purchases of crude palm oil (CPO) from third parties and a net inventory build-up of 8,000 tonnes of product. The first quarter of 2019 saw a drawdown of net inventory, by some 17,000 tonnes.

The COVID-19 pandemic has affected demand in major markets like China and India, impacting CPO prices which have since fallen over 30% from their peak in January this year, and prices are expected to remain weak in the short-to-medium term.

In the longer term, while Indonesia’s B30 biodiesel mandate has been one of the key demand drivers for palm oil, faltering oil prices and lower fuel consumption may present challenges to the programme. Nonetheless, being a staple used in dining establishments and food processing industries, a recovery in palm oil demand can also be expected as lockdown measures ease globally, the company reported.