Wilmar Q4 net profit halved by impairment on Australian sugar assets

WILMAR International's net profit for the fourth quarter more than halved to US$200.9 million from a restated US$426.7 million a year ago chiefly due to impairment on sugar-milling operations in Australia on the back of a prolonged slump in sugar prices.

The group achieved better operating performance across all core segments, except the palm plantation and sugar-milling businesses which were affected by low palm oil and sugar prices, said Wilmar in its results release after market closed on Thursday.

Lower commodity prices led the group to post a 3 per cent drop in revenue to US$11.1 billion from US$11.5 billion.

Net profit excluding discontinued operations fell 53.4 per cent to US$199 million. Core net profit was 10.3 per cent lower at US$335 million mainly due to the African swine fever outbreak in China affecting the oilseeds and grains segment, coupled with weaker commodity prices that impacted the upstream sugar and palm oil operations.

Accordingly, earnings per share came in lower at 3.2 US cents from 6.7 US cents.

For the full year, the palm oil giant's earnings sank 5.7 per cent to US$1.1 billion on the back of a 2.1 per cent improvement in revenue to US$44 billion.

Due to continued depressed sugar prices, the agri-giant said it chose to be conservative and provided for an impairment of US$139 million on goodwill and sugar-milling assets in Australia even though the milling operations have been generating positive cash flows since acquisition.

The board has proposed a final dividend of seven Singapore cents a share, the same as the previous year. Including the interim dividend of 3.5 Singapore cents, total dividend for 2018 amounts to 10.5 Singapore cents versus 10 Singapore cents in 2017.

The stock gained four Singapore cents or 1.2 per cent to finish at S$3.39 on Thursday.

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