Wilmar posts five-fold jump in quarterly profit
Earnings soar to US$316mil while revenue climbs to US$10.8bil
PETALING JAYA: Wilmar International Ltd, the world’s largest palm oil refiner, has reported a five-fold increase in its second quarter profit to end-June on higher margins in its oilseed and grain businesses, as well as improved performance in tropical oils.
Net profit rose to US$316.4mil from a restated US$59mil a year earlier, it said in a statement yesterday. Revenue increased to US$10.8bil compared with US$10.6bil previously.
“The trade tensions between the United States and China improved crush margins in the short term, thus benefitting our oilseed-crushing business,” chief executive officer Kuok Khoon Hong said.
However, a prolonged dispute between the two countries, Kuok said, would have a negative impact on crush margins due to lower plant utilisation.
Nevertheless, we expect our other businesses such as consumer products, rice and flour milling to perform reasonably well in the coming quarters,” he said.
In the statement, the company said pre-tax profit at the group’s tropical oils unit surged 165% in the quarter from a year earlier on the better performance in the midstream and downstream units.
“While sustained low palm oil prices would affect our plantation business, our downstream businesses will benefit from increased demand and better margins for its products,” Kuok said.
Production yield at the group’s plantations improved 11% to 5.8 tonnes per hectare in the second quarter due to more favourable weather conditions. Production of fresh fruit bunches increased 5% to 1.08 million tonnes.
The higher production mitigated the decline in selling prices.
The benchmark palm oil futures averaged about 6% lower in the second quarter from a year earlier. Soybeans were about 6% higher and soyoil was 4% weaker.
Kuok said higher crude oil prices had benefitted the group’s oleochemical and biodiesel businesses. The group’s specialty fats business also contributed positively as a result of an increase in global demand during the quarter.
Sugar performance should also improve in the second half of the year, Kuok said, with the commencement of the crushing season in June. The sugar business reported a pre-tax loss of US$46.2mil in the quarter under review. Wilmar’s business activities include oil palm cultivation, oilseed crushing, refining, sugar milling, the manufacturing of consumer products, specialty fats, oleochemicals, biodiesel and fertilisers, as well as rice and flour milling.
It has over 500 manufacturing plants and an extensive distribution network covering China, India, Indonesia and some 50 other countries. The group has a multinational workforce of about 90,000 people.