Wilmar Reports Uplift in Profits Helped by “Steady Performance” From Tropical Oils, Oilseeds & Grains but Shares Tumble
11 May 2016 --- Wilmar International has reported a 3.2 percent uplift in the net profits to $239.4 million in the quarter, helped by a "steady performance" from Tropical Oils, Oilseeds & Grains and an improved performance from sugar.
But the Singapore-listed agribusiness took a $22.7m write down financial hit.
Revenue declined 4 percent to US$9.0 billion due to lower commodity prices.
Shares in the world’s biggest palm oil trader shares fell over four percent following the results as it warned of challenging market conditions ahead.
Tropical Oils (Plantation, Manufacturing & Merchandising) achieved an 8 percent increase in pre-tax profit to US$149.3 million in the period aided by lower commodity prices.
Oilseeds & Grains saw pre-tax profit increased 2 percent to $168.8 million in the period.
The increase was achieved on the back of volume and margin growth in Consumer Products and continued improvements from the group’s rice and flour operations.
But this was partially offset by lower crush margins due to excessive arrival of soybeans, despite an increase in crush volume.
Sugar reported a significantly smaller loss of $18.2 million in the quarter compared to a loss of $68.0 million the year previous.
Losses in Sugar were primarily due to seasonal plant maintenance in the first half of the year for the Australian Milling business as the crops are only harvested in the second half of the year.
The stronger performances from the group’s merchandising business, coupled with higher sales volume from the Indonesian refineries mitigated the losses.
Share of results of Joint Ventures & Associates declined 67% to $12.8 million in the period. This was due to lower contributions from the Group’s China associates and sugar associate in India.
Mr. Kuok Khoon Hong, chairman and CEO, said, “We expect the recent improvement in CPO prices to benefit our Plantation business. However, this will be partially offset by lower margins in our downstream businesses due to higher feedstock costs. “
“Consumer Products will continue to achieve healthy growth although crush margins are expected to come under pressure as a result of excessive soybean arrivals into China in the coming months and amidst volatile markets. Recent volatility in sugar prices will also have an effect on our Sugar operations. Operating conditions in the second quarter are expected to be challenging.”
