First Resources Limited FY2025 Financial Analysis: Strong Growth Driven by Acquisition and Higher Prices

First Resources Limited, a leading palm oil producer listed in Singapore, reported robust results for the fiscal year ended 31 December 2025. The Group benefited from organic growth, favorable commodity prices, and the strategic acquisition of PT Austindo Nusantara Jaya, Tbk (“ANJ”). Below, we present a structured analysis of the key financial metrics, performance trends, dividends, and notable corporate actions.

Key Financial Metrics & Comparative Table

Performance and Operational Review

• Revenue: Increased 59.9% year-over-year to \$1,661.1 million, driven by higher selling prices and volumes. The acquisition of ANJ was a major contributor.
• Net Profit: Profit attributable to owners rose 44.0% to \$353.9 million, with underlying net profit (excluding fair value changes and credit losses) up 56.5%.
• EBITDA: Surged 54.1% to \$614.9 million, reflecting strong operational leverage and favorable market conditions.
• Gross Margin: Slightly contracted due to higher purchases from third parties, but remained robust at 41.9%.
• Balance Sheet: Total assets grew 48% to \$2,892.6 million, with net gearing rising to 0.40x following the ANJ acquisition and new debt drawdowns. Cash and cash equivalents stood at \$289.4 million.

Exceptional Items & Corporate Actions

• Acquisition of PT ANJ: Completed in May 2025 for \$329.8 million, expanded upstream capacity and contributed meaningfully to revenue and profit. The Group also acquired PT Masuba Citra Mandiri for \$13 million.
• Negative Goodwill: \$5.6 million recognized from PT MCM acquisition.
• Share Buybacks: Continued buybacks, with 292,600 shares repurchased in 2H2025. Treasury shares now represent 2.26% of issued shares.
• Divestments: Certain non-core operations discontinued; assets and liabilities classified as held for sale.
• Related-Party Transactions: Aggregate value of IPTs was \$105.8 million, with major transactions involving associates of key management.
• Contingent Liabilities: Administrative charges paid for land handover to the Indonesian government (\$5.6 million) due to regulatory changes. Additional charges may arise.

Dividend Summary

• FY2025 Proposed Final Dividend: 10.20 SG cents per share (tax-exempt, one-tier), a substantial increase from 6.30 SG cents in the previous year.
• Interim Dividend Paid: 4.50 SG cents (FY2024: 3.50 SG cents).
• Total Dividends (FY2025): 14.7 SG cents, up from 9.8 SG cents in FY2024.

Historical Performance Trends & Outlook

• Sales Volume: Plantations and Palm Oil Mills saw CPO sales volume rise 30% YoY; Refinery and Processing volumes rose 61%.
• Strong Growth: Driven by both organic improvements and full-year contributions from acquisitions.
• Cost of Sales: Up 62.8%, mainly due to volume growth. Gross profit margins remained healthy.
• Cash Flow: Operating cash flows before working capital rose to \$632.8 million, but net cash from operations was \$286.5 million due to working capital build-up.
• Dividend Payout: Higher payout reflects confidence in earnings and cash flow sustainability.

Chairman’s Statement & Tone

“CPO prices averaged higher year-on-year in 2025, supported in part by Indonesia’s expansion of its biodiesel mandate from B35 to B40. The B40 mandate has been, and is expected to remain, a key pillar of palm oil demand. While Indonesian exporters have had to contend with higher export levies arising from changes to the levy structure in 2025, as well as the possibility of further adjustments in 2026, the increased levies support the continued implementation of the biodiesel programme.

Following the strong production in 2025, industry supply growth is likely to moderate in 2026. For the Group, production is expected to benefit from progressive yield improvements as replanted areas mature and come into production, as well as from the full-year contribution from PT Austindo Nusantara Jaya, Tbk, acquired in May 2025.

Looking ahead, government policies, geopolitical dynamics and broader macroeconomic conditions continue to influence market prices of palm and other vegetable oils. The Group will remain vigilant of these regulatory and economic developments, while maintaining its focus on operational efficiency, the integration of acquired assets, and our ongoing replanting programme to drive sustainable growth in output.”

The tone is positive, emphasizing continued focus on operational efficiency, asset integration, and sustainable production growth.

Events & Risks Affecting Performance

• Regulatory Changes: Land handovers to the Indonesian government may result in additional charges.
• Debt Levels: Increased gearing due to acquisition financing. Net borrowings now at \$662.2 million.
• Macroeconomic Environment: CPO prices supported by government biodiesel mandates but subject to policy and global economic shifts.
• Foreign Exchange: Translation losses from IDR depreciation impacted other comprehensive income.
• Asset Sales: Divestment of non-core assets may occur, with some assets already classified as held for sale.

Conclusion & Investment Recommendations

Overall Assessment: The Group delivered strong financial performance, underpinned by higher prices, acquisition-driven growth, and robust cash flows. While net gearing has increased due to acquisitions, operational leverage and dividend payout remain attractive. Management’s positive outlook for 2026, supported by policy-driven demand and asset integration, suggests continued growth albeit at a more moderate pace as industry supply levels off.

Recommendation for Current Shareholders: Hold. The company is executing well, rewarding shareholders with higher dividends, and appears positioned for further growth as acquisitions are integrated and operational improvements continue. Monitor debt levels and regulatory risks.

Recommendation for Potential Investors: Consider buying. First Resources offers a compelling entry point with strong earnings momentum, attractive dividend yield, and strategic expansion. However, prospective investors should assess the risks associated with higher gearing and regulatory uncertainties in Indonesia.

Disclaimer: This analysis is based strictly on the information provided in the company’s official financial statements for FY2025. It does not constitute investment advice. Investors should conduct their own due diligence and consult professional advisors before making investment decisions.

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