First Resources profit plunged 41.1% to US$34.2m in Q4

It blamed average selling prices which fell despite high sales volumes.

First Resources’ profits (withered) in Q4 2017 as they fell 41.1% YoY from (US$58m) to (US$34.2m). For the whole year, however, its profits grew 48.5% from (US$125.4m) to (US$186.2m).

According to its financial statement, profit from operations was down by 31.8% to US$59.8m, impacted by lower average selling prices. However, sales rose 3.2% to US$180.8m due to higher sales volumes.

According to RHB Research, fresh fruit bunches (FFB) output grew 13.3% YoY in FY17. The broker thinks FFB growth will hit 13.4% for 2018.

RHB noted that the crude palm oil (CPO) price rose by 3% YoY in 2017, to average US$603/tonne. “For every MYR100/tonne change in CPO price, we estimate its earnings would be impacted by 4-5% per annum,” it said.

RHB also added that First Resources’ downstream margins improved in Q4 2017 to 2.7%. “This came on the back of higher selling prices (+6% YoY) and higher sales volumes (+13% YoY). We expect downstream margins to stay in the positive territory of 3-4% going forward, given the stabilising palm kernel (PK) and palm kernel oil (PKO) price trend,” RHB added.

The surprise came in the form of a special dividend declared for its 25th anniversary. Net DPS for 2017 is at 6.8 cents, or a net dividend payout of 60%, implying a net yield of 3.9%.