News
AGRIBUSINESS | Staff Reporter, Singapore
view(s)

First Resources hinges growth on downstream business

Its refinery is operating at 70% utilisation as at September.

A muted outlook on First Resources' fresh fruit bunches (FFB) is expected for 4Q but a hope is in sight for its downstream division.

First Resources is maintaining its -10% YoY fresh fruit bunches (FFB) output guidance for FY16, which implies a flattish QoQ output in 4Q16.

RHB's projection of its FFB output is in line with management’s expectation but it believes 4Q16 could turn out stronger vis-à-vis 3Q. As such, it is revising its FFB output forecast to reflect a 7% YoY decline in FY16, followed by an unchanged 7-9% growth for FY17F-18F.

The research house also expects its downstream division should remain in the black in 4Q16.

In 9M16, the group’s refinery operated at 70% utilisation, while 1H was at 76%. The biodiesel division is also reaping positive margins, as First Resources has delivered about 90% of its contracted biodiesel output of 66,000 kilolitres to Pertamina for the May to October contract.

Although October is already over, management expects to be able to fulfil the remaining 10% of the contract soon.

For the November to April period, the company has obtained a contract to deliver 55,000 kilolitres of biodiesel to Pertamina, a reduction of 13.6% from the last contract.

"We understand that the lower allocation is due to the higher number of biodiesel players in the market," said RHB.

 

Do you know more about this story? Contact us anonymously through this link.

Click here to learn about advertising, content sponsorship, events & rountables, custom media solutions, whitepaper writing, sales leads or eDM opportunities with us.

To get a media kit and information on advertising or sponsoring click here.