First Resources (EB5) H2 2023 earnings summary

Executive summary

• FY2023 EBITDA was $282.0m, down 44.6% YoY, and underlying net profit was $146.6m, down 56.1%, as palm oil prices moderated from 2022 highs.

• Production grew: FFB harvested rose 0.5% and CPO output increased 8.0% YoY.

Financial highlights

• FY2023 sales were $980.6m, down 20.0% YoY; gross profit fell 42.3% to $363.0m and gross margin eased to 37.0% from 51.4%.

• EBITDA declined 44.6% to $282.0m, with a 28.8% margin versus 41.5%; net profit was $145.4m, down 55.3%.

• Underlying net profit, excluding expected credit losses and biological-asset fair-value gains/losses, was $146.6m, down 56.1%; 2H was $78.8m, down 59.9%.

• FY2023 earnings included a $13.0m asset write-down related to rubber-to-oil-palm conversion and a $5.7m foreign-exchange loss.

Outlook and guidance

• 2024 global palm oil supply growth is expected to remain limited due to weather and a continued lack of new industry plantings; biodiesel mandates, including Indonesia’s B35, are demand drivers.

• Integration of acquired Riau plantation assets is expected to create operational synergies and contribute positively in subsequent years; replanting is planned over the ensuing years.

• Expected 2024 capital expenditure is ~$200m, including plantation development, infrastructure, mill construction and upgrades, and processing facilities.