Wilmar Q1 net profit down 12.7% on investments, but coronavirus fuels consumer staples demand

MAINBOARD-LISTED agri-business group Wilmar International saw profit tumble in the first quarter from mark-to-market losses on investment securities, it said in an update on Monday.

Net profit was down by 12.7 per cent year on year to US$224.3 million for the three months to March 31, even as revenue rose by 4.6 per cent to US$10.9 billion.

Still, core net profit was up by 22.5 per cent to US$306.5 million on stronger consumer product sales and tropical oil downstream operations, Wilmar told shareholders.

Even with the coronavirus pandemic, Wilmar said that it is still on track to list its China business in the second half of the year, and "we are cautiously optimistic that our second-quarter operations will not be significantly impacted" if the economy in that market recovers as expected.

The group also reported growing demand for consumer staples such as rice, flour and cooking oil, with the pandemic having forced households to stay home. The surge in sales in this segment helped Wilmar to make up for a drop in take-up of medium pack and bulk products for the hotel, restaurant and catering and food-processing industries, which have suffered from lockdowns.

Wilmar said that the consumer products business is expected to continue posting strong growth in the second quarter; business-to-business demand is likely to begin its rebound in the same period, as countries around the world ease their lockdown measures.

Although palm oil and sugar prices are on the decline - a development which could affect the group's palm plantations and sugar mills - Wilmar noted in its outlook statement that it expects demand for feed to pick up as an economic recovery in China comes with higher pig production in China.

Meanwhile, Wilmar pared its net debt by US$1.43 billion over the quarter to US$11.79 billion as at end-March, as lower commodity prices helped it to improve its margins and working capital needs and yield a positive cash flow from operating activities.

The counter closed at S$3.54 on Monday, up by S$0.07 or 2.02 per cent, before results were out.