First Resources profits slump 29.8% in June

Palm oil products selling lower than average.

First Resources is experiencing business difficulties as palm oil prices remain weak due to slower growth in demand and price pressures from other competing edible oils.

In a media release the Group recorded a net profit of US$71.1 million in 6M2014, down 29.8% against 6M2013 and a 22.8% decrease in profit from operations to US$110.4 million.

For 2Q2014, net profit decreased by 30.8% to US$26.1 million while profit from operations decreased by 10.3% to US$50.4 million.

The declines in profit from operations were mainly due to the lower average selling prices of crude palm oil and its refined products. This was partially offset by higher sales volumes from the Refinery and Processing segment, which was driven by the expansion of the Group’s processing capacity.

Here’s more from First Resources:

Palm oil prices have remained weak due to slower growth in demand and price pressures from other competing edible oils. With Indonesia’s mandatory biodiesel policy and long-term demand growth from emerging markets, the Group remains positive on the long-term  fundamentals of the palm oil industry.

Barring any weather shock, with the favourable age profile of our plantations, the Group expects year-on-year volume growth to continue in the third and fourth quarters of this year.