Wilmar Q1 profit jumps 49.1% to US$241.2m

DRIVEN by improved crushing margins and better performance in its consumer products, agribusiness group Wilmar International's net profit for its first quarter ended March 31, 2015 jumped 49.1 per cent to US$241.2 million, compared with US$161.8 million in the year-ago period.

The improvement in profit was despite a 8.3 per cent slump in the group's revenues to US$9.41 billion, versus US$10.27 billion in the comparable period last year, as a result of lower commodity prices.

In the last quarter, Wilmar's oilseeds and grains business witnessed an increase in pretax profit from US$13.6 million in the year-ago period to US$166.1 million.

Crushing margins had improved during the quarter due to lower soya bean imports into China by financial traders and lower soya bean prices, while lower feedstock costs, together with higher sales volume, contributed to improved margins, the group said.

Meanwhile, Wilmar's tropical oils segment registered a 44.2 per cent drop in pretax profit to US$152.1 million, as a result of lower contributions from both its plantation and manufacturing businesses.

Production yield had declined 7 per cent to 4.5 tonnes per hectare as its Malaysian plantations were affected by unfavourable weather conditions, while lower crude palm oil prices also contributed to the lower plantation profit, Wilmar said.

In addition, refining margins continued to contract on the back of industry overcapacity, the group added.

Over the same period, Wilmar's sugar business reported a higher pretax loss of US$68 million, compared with a pretax loss of US$54 million in the year-ago period. This was due to weaker performances from the group's Indonesian refineries and merchandising business as well as seasonal losses in milling which are typically incurred as a result of plant maintenance in the first half of the year, Wilmar said.

Wilmar's chairman and CEO Kuok Khoon Hong expects the group's crush margins to remain positive going into mid-2015. Consumer products will continue to grow globally with reasonable margins, he said.

While the operating conditions for tropical oils remain challenging, Mr Kuok believes that the company will be able to overcome the current difficult environment, especially if the Indonesian government implements its proposed support policy for biodiesel. "Overall, we are cautiously optimistic that second quarter performance will be satisfactory," he said.

Wilmar has also adopted a new segment reporting of revenue and profitability commencing with the first quarter 2015 results.

"The changes will align the reporting segments in accordance with the core of Wilmar's strategy ... Going forward, the four reporting segments will be based on agriculture products, namely tropical oils, oilseeds and grains, sugar and others," the group said.

Earnings per share for the quarter was 3.8 US cents while net asset value per share was 241.9 US cents. No dividends were declared for the quarter. Before results were announced on Thursday, Wilmar closed trading up 0.63 per cent at S$3.19.