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AGRIBUSINESS | Staff Reporter, Singapore
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First Resources FFB nucleus production up 13.1% in Q1

Production was supported by improved yield and more new mature areas.

First Resources' fresh fruit bunch (FFB) production jumped 12.4% to 706,264 tonnes, in line with nucleus growth of 13.1% to 624,688 tonnes.

UOB Kay Hian said it forecasts a net profit of US$29m-US$32m,  due to weaker quarterly FFB production as Q1 is a low production period and weaker crude palm oil (CPO) prices.

Yearly earnings could also be muted as the improved production would be offset by substantially lower CPO prices.

UOBKH analyst Leow Huey Chuen noted that there are 16,000ha of new areas coming into maturity in 2018 (10.8% of 2017 mature areas). 

"FFB purchased increased substantially QoQ and YoY in 1Q2018 as the FFB purchased was to maintain utilisation rate of the new mill which was commercialised in 2H17. The mill was built ahead to cater to the upcoming production at its Kalimantan estates," she added.

Meanwhile, in line with FFB production trend. CPO production dipped 5.5% from last quarter but rose 19.2% from last year. The yearly increase was higher than FFB production rise of 12.4% YoY mainly due to a better oil extraction rate.

Leow noted refining volume is expected to be weaker QoQ, but higher YoY on the back of more feedstock available in the market. "Meanwhile, refining margin is expected to be weaker YoY on lower biodiesel margins. However, there could be some upside surprise in pure refining margins as Indonesia refiners gained market share at the expense of Malaysian refiners as Malaysian refiners were struggling to secure CPO in 1Q2018," she added.

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