Wilmar Q2 net profit halved due to lower crush margins

AGRI giant Wilmar International's net profit for the second quarter fell 52 per cent to US$151 million from a restated US$316.4 million a year ago on the back of lower soybean crush margins, weaker showing by associates and sugar business as well as higher finance cost.

Revenue was 9 per cent lower at US$9.8 billion from US$10.8 billion a year ago due to lower commodity prices which were partially offset by a nearly 4 per cent jump in sales volume.

Core net profit halved to US$177 million for the three months to June from US$352 million. The main culprit was the greater-than-expected impact of the African swine fever on soybean meal demand which led to lower crush margins, said the company in its results announcement on Tuesday. This negative was however partially offset by strong performance from consumer products and oleochemicals.

Although the sugar operations in Australia and Indonesia performed better this year, Wilmar said the segment was impacted by the consolidation of Shree Renuka Sugars Limited which became a subsidiary in June 2018 and the accounting losses of its discontinued operations in Brazil. In addition, the results were also affected by lower contributions from China associates.

Over the period, finance costs rose 27 per cent to US$247 million as a result of higher borrowing rates following hikes in interest rate and higher average bank borrowings, said Wilmar.

Accordingly, earnings per share fell to 2.4 US cents versus five US cents a year ago.

The group has declared an interim dividend of three Singapore cents per share, lower than 3.5 Singapore cents per share recommended in the previous year's corresponding quarter.

For the first-half period, net profit declined 22 per cent to US$408 million on the back of a nearly 8 per cent dip in revenue to US$20 billion. Core net profit dropped 20 per cent to US$427 million over the half-year period.

Wilmar shares finished higher by three Singapore cents or 0.8 per cent at S$4.05 on Tuesday.