Wilmar Q1 net profit doubles to US$450.2m

WILMAR International's net profit doubled to US$450.2 million in Q1 2021 from US$224.1 million in the previous year, setting a record for the agribusiness group's first-quarter results since its listing.

Core net profit was up 38.3 per cent to US$423.7 million for the quarter ended March 31, from US$306.4 million in the previous year. Revenue rose 30.6 per cent to US$14.3 billion.

Wilmar said all of its core businesses put in a strong performance in the quarter. The results were boosted by a reversal of mark-to-market losses on hedging derivatives recorded in Q4 2020.

The feed and industrial products segment recognised good manufacturing margins, and the plantation and sugar million segment recorded higher profits on the back of stronger commodity prices and the capitalisation of maintenance costs during the sugar milling off-season. Wilmar noted that the maintenance costs will be amortised over the sugar milling season.

Strong recovery in the group's key market of China has resulted in more people dining out, driving demand for food products from the hotel/restaurant/catering and food processing industries. As a result, food product segment sales grew 13.1 per cent.

Continued growth in consumer products sales, which had already been high last year, pushed sales volumes above pre-Covid-19 levels.

In the feed and industrial products segment, sales growth driven by strong sugar merchandising activities was partially offset by lower soya bean crushing activities.

Although Wilmar generated strong operating cashflows of US$1.06 billion before working capital changes on the back of strong operating profit, overall cash flow from operating activities decreased to US$96.4 million due to higher commodity prices pushing up working capital requirements.

Net debt increased to US$14.11 billion as at March 31. The group has unutilised banking facilities amounting to US$22.5 billion.

Wilmar expects sustained high palm oil prices to benefit its oil palm plantation business in the coming months, although manufacturing margins will be impacted.

The feed and industrial products segment will likely bring in lower earnings due to lower crush margins, but the sugar milling business will benefit from higher sugar prices.

Wilmar's operations in India and Myanmar have not experienced significant disruptions as the group is a provider of essential food products. However, the group continues to monitor the situations closely, especially as they affect their employees' health and safety.

"Whilst the pace of economic recovery around the world from the pandemic is uneven, we are cautiously optimistic that we will perform satisfactorily for the rest of the year," Wilmar said.

Wilmar shares closed at S$5.30 on Thursday, up S$0.03 or 0.6 per cent.