Wilmar's net profit, excluding discontinued ops, up 38.7% in H1 2020

MAINBOARD-listed agri-business group Wilmar International saw its profit (excluding discontinued operations) jump 38.7 per cent to US$610.9 million for the six months ended June 30, on the back of improved contributions across all core segments.

Revenue went up 12 per cent to US$22.66 billion, with increased consumer product sales as people ate more often at home and also bought "higher-quality products", said the group in a bourse filing. This and the consolidation of bread-and-spreads maker Goodman Fielders' results in the current period also led to higher revenue in the first half.

Earnings per share excluding discontinued operations stood at 9.6 US cents, up from 7 US cents from the same period a year ago.

An interim dividend for H1 2020 of S$0.04 per share was proposed by the board, to be payable on Aug 27, 2020.

Wilmar's feed and industrial products segment, which includes tropical oils, oilseed, and grains and sugar, achieved a 105 per cent increase in pre-tax profit to US$370.8 million in H1 2020, bolstered by a strong recovery in oilseeds and grains, as demand in China recovered from the African swine fever outbreak that occurred in the previous year.

This resulted in strong crush margins and volume during the period, said the group. In addition, higher sugar merchandising activities in H1 2020 further improved the performance of the segment, but it was partially dragged down by lower performance of the tropical oils business.

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Its food products segment went up 21 per cent to US$495.1 million, driven by strong demand for consumer products in H1 2020. This was partially offset by lower sales in the medium pack and bulk businesses, as demand from the hotels/restaurants/catering industry was weak in the first quarter of 2020, due to lockdowns in the major markets where Wilmar operates.

Wilmar's plantation and sugar milling segment continued to be in the red, but losses before tax was lower at US$82.9 million for the half-year, compared with the US$103.5 million previously. This was propped up by better performance from the palm oil plantation businesses, on the back of stronger palm oil prices compared to H1 2019.

Kuok Khoon Hong, Chairman and chief executive of Wilmar, said: "We have been fortunate that our operations have not been significantly impacted as the group's business is predominantly in the production and distribution of essential food products."

"Further, China, the country where the group has the largest operations, has recovered from this pandemic earlier than most countries."

He noted that the group also benefits from having many integrated manufacturing complexes in its major markets, which helped to ensure continuous supply of its products during the lockdowns.

In its outlook, the group expects the food products and feed and industrial products segments to continue to perform well, while the recent increase in palm prices expected to contribute favourably to its plantation business.

"We are cautiously optimistic that our second-half performance will be satisfactory," added Mr Kuok.

Before the release of its half-year results, Wilmar's shares closed at S$4.69 on Tuesday, down 11 Singapore cents or 2.29 per cent.