First Resources sees 16% fall in Q3 profit on lower palm oil prices

Palm plantation company First Resources said on Thursday that its net profit for the third quarter of this year fell 16.1 per cent to US$43.1 million from US$51.43 million in the same period last year, due mainly to the lower average selling prices of crude palm oil and its refined products.

The mainboard-listed company said the declines in operating profit 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.

Third quarter sales decreased by 2.8 per cent to US$148.8 million from the year-ago period.

The company said palm oil prices have recovered from their recent lows in August 2014, partly as a result of lower than expected inventory levels in Malaysia and Indonesia. However, it expects prices to remain soft due to the weakening discretionary demand for biofuel caused by current narrow price spreads between crude oil and vegetable oils, as well as the sizeable on-going soybean harvest in the United States.

The company said it remains positive on the longer-term outlook of the palm oil industry and will continue to invest for the long term.