Wilmar's Q1 profit up 49% at US$241.2m

Singapore

LIFTED by improved crushing margins, better performing consumer products and the absence of foreign exchange losses, 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, from US$161.8 million in the year-ago period.

The bottomline improvement was despite an 8.3 per cent slump in the group's revenues to US$9.41 billion, from US$10.27 billion as a result of lower commodity prices.

The period showed net operating items - taking into consideration other operating income and expenses - swinging to a positive US$40.8 million from a negative US$137.5 million - mainly due to the absence of foreign exchange losses.

Wilmar has adopted a new segment reporting of revenue and profitability commencing with its first quarter 2015 results to align the reporting segments in accordance with its core strategy, the group said in a statement. Going forward, the four reporting segments will be based on agriculture products, namely tropical oils, oilseeds and grains, sugar and others.

In the first quarter, Wilmar's oilseeds and grains business witnessed an increase in pre-tax profit from US$13.6 million in the year-ago period to US$166.1 million. Crushing margins 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 pre-tax profit to US$152.1 million, as a result of lower contributions from both its plantation and manufacturing businesses. Production yield 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 (CPO) prices also contributed to the lower plantation profit.

Refining margins continued to contract on the back of industry overcapacity, tighter CPO supplies and weaker demand for palm products.

Over the same period, Wilmar's sugar business reported a higher pre-tax loss of US$68 million, compared with a pre-tax 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, the group said.

Wilmar's chairman and chief executive 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 Wilmar will be able to overcome the current difficult environment, especially if the Indonesia implements its proposed support policy for biodiesel. Wilmar is one of Indonesia's major biodiesel producers.

Earnings per share for the quarter were 3.8 US cents while net asset value per share was US$2.419. No dividend was declared. Wilmar closed trading up 0.63 per cent at S$3.19 on Thursday.