First Resources' profits dipped 12.9% to $162.3m in 2018

Growth in production volumes outweighed overall sales volumes during the year.

First Resources ended 2018 on a dismal note after its profits dropped 12.9% YoY to $162.3m (US$120m) from $186.24m (US$137.7m), an announcement revealed. Revenue also slipped 2.1% YoY to $856.79m (US$633.49m) from $875.05m (US$646.98m) in 2017.

In Q4, profits crashed 49.2% YoY from $46.21 (US$34.16m) to $23.45m (US$17.34m), whilst revenue fell 19.5% YoY to $196.78m (US$145.49m) from $244.52m (US$180.79m) in 2017.

The firm attributed its weak FY2018 performance to a net inventory build-up during the year, which resulted in a smaller increase in overall sales volumes than the growth in production volumes.

“In addition, the depressed palm oil prices experienced by the industry also affected the Group’s average selling prices,” First Resources explained.

Looking ahead, the Group said it expects continued production growth in 2019 contributed by maturing plantations, albeit at a slower pace than in 2018.

“Palm oil prices have started to recover from the lows of Q4 2018 on seasonally weaker output. Demand in the year ahead is expected to be supported by the extension of Indonesia’s biodiesel mandate in full force, as well as favourable changes to the import and export tax structures in consuming and producing countries,” First Resources’ CEO Ciliandra Fangiono said in a statement. “However, prices will continue to be impacted by macro developments such as the US-China trade negotiations and the supply-demand dynamics of other competing edible oils.”