Wilmar shares fall 5.7% as hedging losses from Iran war weigh on results

[SINGAPORE] Shares of Wilmar International dropped as much as 10.4 per cent on Thursday (Apr 30) after the group reported a drop in net profit for its first quarter.

The company on Wednesday reported a 22.8 per cent decrease in net profit to US$265.6 million for the first quarter ended Mar 31, from US$343.9 million in the corresponding year-ago period.

Investors reacted negatively to the news, with the counter retreating as much as S$0.40 to S$3.43 on Thursday as at 1.35 pm. It later pared some losses to close down 5.7 per cent at S$3.61.

Wilmar attributed the decline to a few reasons, including “temporary unrealised mark-to-market losses from (its) hedging activities caused by the Iran war”.

Revenue for the quarter, however, rose 21.9 per cent to US$19.8 billion from US$16.2 billion in the year-ago period, backed by higher sales volume across all its core business segments.

Following the results, brokerages RHB and Citi both maintained “neutral” ratings on the stock, though they each raised their target price.

RHB raised the target price to S$3.70, up from S$3.45. It also raised Wilmar’s net profit forecasts by 5.7 per cent, 8.4 per cent and 7 per cent for the financial years 2026, 2027 and 2028, respectively, after adjusting for the brokerage’s latest in-house foreign exchange assumptions.

The brokerage also increased its crude palm oil (CPO) price assumptions to RM4,400 (S$1,420) per tonne for 2026 and RM4,300 per tonne for 2027. Wilmar is a major player in the palm industry, higher CPO prices serve as a key driver for the company’s valuation.

Addressing the broader geopolitical and macroeconomic climate, RHB noted that if its base case scenario of a Middle East ceasefire holds for more than two weeks, CPO prices should stabilise between RM4,200 and RM4,500 per tonne. This stabilisation would likely keep higher biodiesel mandates in place, resulting in tighter overall global supplies of vegetable oils, said RHB.

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Wilmar posts 22.8% fall in Q1 net profit to US$265.6 million amid volatile commodity prices

The broker also said that the palm oil-gas oil spread has turned positive again, meaning there should still be adequate funding in the Indonesia biodiesel fund to subsidise B50 mandates at the current export tax and levy rates.

Meanwhile, Citi raised its target price to S$3.95 from S$3.10, citing liquidity flows into Singapore equities.

While Wilmar’s revenue saw a 22 per cent boost partly due to the consolidation of Agri Business Limited (AWL), Citi noted that underlying growth remained intact.

Excluding AWL, first-quarter sales volume and revenue would have still grown by 7.7 per cent and 7.6 per cent, respectively.