First Resources

First Resources: Announced 2Q13 results which were at the lower end of estimates with net profit at US$37.7m (-26% y/y, -41% q/q) taking 1H13 net profit to US$101.3m (+2% y/y) For 2Q13 revenue at US$119.7m (-22% y/y, -31% q/q) was mainly due to the lower sales volume and average selling prices from the Refinery and Processing segment. The production of fresh fruit bunches (FFB) was impacted by seasonality and biological slowdown of palm trees in 1H13, resulting in a marginal decline of 0.5% in the Group’s FFB production volume. FFB yield for the period declined to 7.7 tons per ha from 10.0 tons per ha in 1H12, largely due to the combined dilutive effect of having a higher percentage of young trees, which have not reached prime production ages, and lower yields from plantations that were recently acquired. Production is expected to improve in the 2H13, in line with the traditional production up cycle. The Group’s production growth over the forthcoming years will also be enhanced by continual yields improvements in newly acquired assets as a result of our rehabilitation program. Looking ahead, grp note that despite current weakness in the global economy and increasing global edible oil supplies, the grp remains positive on the longer term outlook of the palm oil industry, which is supported by underlying demand growth from top consuming markets. Recent weakness in the Indonesian Rupiah relative to the USD is expected to benefit the Group as its revenue is mainly denominated in USD while a substantial portion of cost is denominated in Indonesian Rupiah. The Group will continue to focus on expanding its plantation footprint and milling capacity. In 1H13, the Group added 6,755 ha of new oil palms, increasing its total planted area under management to 161,792 ha, which includes the plantations acquired in 1Q13.