First Resources Limited 1H2025 Financial Results Analysis

First Resources Limited, a leading palm oil producer listed on the Singapore Exchange, has reported its condensed interim financial results for the six months ended 30 June 2025 (1H2025). The Group’s performance was notably impacted by the completion of its acquisition of PT Austindo Nusantara Jaya, Tbk (“ANJ”) in May 2025, which contributed to significant changes in its financial position and operating results.

Key Financial Metrics

*No explicit quarterly breakdowns are presented; comparisons are half-yearly and to prior year-end where relevant.

Historical Performance Trends

First Resources Limited recorded a strong year-on-year improvement in all key metrics in 1H2025:

• Revenue rose 47.4% YoY, driven by higher average selling prices and increased sales volumes, notably due to the acquisition of ANJ.
• EBITDA increased 56.3% YoY to US\$262.3 million, reflecting strong operational leverage and higher production.
• Net profit attributable to owners surged 43.6% YoY to US\$149.2 million.
• Underlying net profit (excluding fair value changes in biological assets) jumped 67.8% YoY to US\$152.0 million, reflecting robust core profitability.
• Gross margin improved to 41.7% (from 40.8%).
• EPS increased from 6.67 US cents to 9.63 US cents.

Exceptional Items and One-Offs

• Acquisition of PT ANJ: In May 2025, the Group completed the acquisition of a 91.17% stake in PT Austindo Nusantara Jaya, Tbk for US\$329.8 million. ANJ contributed US\$35.1 million in revenue and US\$6.5 million in profit before tax for the two months post-acquisition. If consolidated from the start of the year, ANJ would have contributed an additional US\$80.3 million in revenue and US\$12.6 million in profit before tax.
• Fair Value Loss on Biological Assets: The Group recorded a loss of US\$3.6 million (vs. a gain of US\$17.1 million in 1H2024) due to a decline in domestic FFB prices as at June 2025, partially offset by higher projected harvest quantities.
• Other Non-Operating Income: US\$5.6 million recognised, compared to a US\$4.0 million expense in 1H2024 (which included a write-off of bearer plants and a loss on disposal of subsidiary).

Balance Sheet and Gearing

• Total assets increased by 40.8% to US\$2,747.9 million, mainly due to the ANJ acquisition and ongoing capital expenditure.
• Gross borrowings more than tripled to US\$916.9 million (from US\$270.1 million at end-2024), as the Group drew down loans to fund the ANJ acquisition.
• Net borrowings rose to US\$726.5 million (from US\$112.9 million).
• Gross gearing ratio increased to 0.58x (from 0.18x); net gearing at 0.46x (from 0.08x), still within a manageable range for the sector.
• Net asset value per share increased to US\$0.92.

Dividends

• Declared interim dividend: 4.50 Singapore cents per share (1H2024: 3.50 SGD cents), payable on 10 September 2025. This is a 28.6% increase YoY, reflecting the stronger earnings and management’s confidence in cash flow generation.

Share Capital and Buybacks

• No new share buybacks during 1H2025. The treasury share balance stood at 2.24% of issued shares.
• 84,000 treasury shares were reissued under the employee share award scheme.

Significant Events and Related-Party Transactions

• Acquisition of ANJ was the key transformative event in the period.
• Related-party transactions amounted to US\$12.3 million outside existing shareholder mandates, and US\$31.0 million conducted under mandates—primarily transactions with companies affiliated with the Fangiono family.

Cash Flows

• Net cash from operating activities dropped sharply to US\$13.8 million (from US\$112.4 million in 1H2024), primarily due to a build-up in inventories and increased trade receivables.
• Net cash outflow from investing activities was US\$404.4 million, mainly reflecting the ANJ acquisition.
• Net cash from financing activities was US\$442.1 million, driven by new bank loans used to fund the acquisition.
• Cash and cash equivalents rose to US\$157.6 million at period-end.

Outlook and Industry Commentary

The company expects continued healthy demand for palm oil, supported by competitive pricing, India’s lower import duties, and Indonesia’s biodiesel mandate. However, management remains vigilant about macroeconomic uncertainties, export levy changes, and ongoing market volatility. The integration of ANJ is expected to further enhance operational performance and production volumes.

Chairman’s Statement

The improved competitiveness of palm oil prices relative to other vegetable oils, together with India’s reduction in import duties, may continue to encourage consuming countries to replenish inventories ahead of upcoming festivities. Combined with Indonesia’s local biodiesel mandate, these factors are expected to support palm oil demand and consumption, even as Indonesian exporters contend with higher export levies following the change in levy structure in May 2025… Post-acquisition, the integration of ANJ is expected to contribute to production volume growth and enhance the Group’s operational performance.

The tone is cautiously optimistic, indicating confidence in volume growth and operational improvement, but also acknowledging policy and macroeconomic risks.

Conclusion and Investment Recommendation

Overall, First Resources Limited delivered a strong financial performance in 1H2025, marked by robust revenue and profit growth, improved margins, and a transformative acquisition. The enlarged balance sheet and higher gearing reflect the scale of the ANJ acquisition, but the company remains in a healthy financial position with rising net asset value and increased dividend payout. However, investors should monitor cash flow dynamics, macroeconomic headwinds, and the integration risks associated with the recent acquisition.

Investor Recommendations

• If you currently hold the stock: Maintain your position. The company’s operational momentum, increased dividend, and successful execution of its expansion strategy support a continued investment. However, keep an eye on gearing levels and integration progress for ANJ.
• If you do not currently hold the stock: Consider accumulating on pullbacks. The outlook remains favorable, the stock offers exposure to palm oil’s structural demand trends, and the company’s enlarged asset base positions it for further growth. However, new investors should be mindful of sector volatility and the company’s now-higher leverage.

Disclaimer: This analysis is for informational purposes only, based strictly on the financial report contents. It does not constitute investment advice. Investors should conduct their own due diligence and consider their risk appetite before making any investment decisions.

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