Here’s how First Resources is bringing profits back to life in 2016

Sales volume, ASP are poised to rebound.

A catch-up is around the corner for First Resources (FR), as analysts predict healthier average selling prices (ASP) and heftier sales volume from downstream operations.

According to a report by UOB Kay Hian, FR is poised to see stronger earnings ahead.

For 2Q16, FR is seen to record raised QoQ fresh fruit bunch (FFB) production. Estimates show FFB production to be in the 5-8% QoQ, though still down 18-20% YoY. Net crude palm oil (CPO) ASP is expected to come in at around US$600/tonne, reflecting a flat YoY movement and 20% QoQ jump.

Further, UOB Kay Hian expects production to be lower but remain relatively good. For 2016, the business’s FFB production is seen dipping 2.8% YoY. This contraction is expected on back of dryness and haze slamming FR’s Riau estates in 2H15.

“The impact would be more severe on older trees, which make up the bulk of Riau’s mature areas. Production from younger areas in West and East Kalimantan has not been sufficient to mitigate the sharp drop in production from the older trees,” UOB Kay Hian asserts.

“Rainfall been good in Sumatra and most of the Kalimantan areas, thus we do not expect further stress on trees and downside to production,” it adds.