First Resources’ profit down 15% in Q3 as palm oil prices plunge

Earnings per share dipped 16%.

First Resources reported that its Q3 net profit declined 15% year-on-year to $57.1m (US$44m) from $66.1m (US$51m) in the same period last year.

The decline was brought about by lower crude palm oil selling prices. Average selling prices slipped 22% year-on-year to US$660/tonne as the group completed the delivery of forward sales that were locked in at favourable prices in FY13.

Its earnings per share dipped to 3.2 US cents, down 16% from 2.7 US cents in the same quarter last year.

According to CIMB, the average CPO prices that First Res achieved in 3Q14 were broadly in line with that of its peers, which sold most of their CPO in the domestic market, albeit at the lower end of the price range.

“However, this was partially offset by better downstream margins of US$49 per tonne, which were ahead of its peers' for the same period (Wilmar: US$17 per tonne, Golden Agri: US$4 per tonne, SIMP: US$20 per tonne). We believe this was because some of the benefits of its CPO hedging activities from its estates business were captured as downstream earnings,” noted CIMB.
Here’s more from CIMB:

First Resources' 3Q14 results were in line with our expectations but below consensus. 9M14 core net profit accounted for 76% of our full-year forecast but only 65% of consensus.
3Q plantation earnings grew 80% qoq as higher FFB output more than offset the weaker selling prices. The downstream division continued to do well, posting EBITDA per tonne of US$49 in 3Q14, ahead of its peers.
We are keeping to our earnings forecasts, our target price,which is based on 12.3x FY16 P/E, and Add rating. We continue to favour the stock for its estates’ young age profile, attractive valuations and hands-on management.

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