Wilmar International has reported record earnings of US$1.16 billion ($1.61 billion) for the 1HFY2022 ended June, 55.8% higher than earnings of US$750.9 million in the same period the year before.
This is the first time the group has surpassed US$1 billion in its first-half earnings since its listing in 2006.
The company attributes the record figure to an improved performance across all of its key business segments, as well as higher contributions from its associates and joint ventures.
Excluding gains from non-operating items, Wilmar’s core net profit for the 2QFY2022 more than doubled to US$652.1 million from 2QFY2021’s core net profit of US$308.5 million.
Earnings per share (EPS) for the 1HFY2022 improved by 55.8% y-o-y to 18.5 US cents on a fully diluted basis.
Revenue for the 1HFY2022 grew by 22% y-o-y to US$36.13 billion in line with the higher commodity prices during the period. The higher revenue was also attributable to the higher sales volume in food products and feed and industrial products sold during the period.
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Correspondingly, cost of sales increased by 23.8% y-o-y to US$32.44 billion.
Segmentally, food products reported a pre-tax profit of US$520.5 million in the 1HFY2022, up by 22% y-o-y. This was mainly due to the gains on dilution of interest in India-listed Adani Wilmar, as well as the upward price adjustments made by the group in the 2QFY2022 to mitigate the impact of the higher commodity prices.
Feed and industrial products saw pre-tax profit improve by 5% y-o-y to US$502.7 million due to the recovery of crushing margins and higher volume of soybeans crushed in the 1HFY2022. The “prudent procurement” of feedstock also contributed to the higher pre-tax profit. The pre-tax profit was, however, offset by weaker sugar merchandising activities in the same period.
Plantation and sugar milling saw pre-tax profit more than double to US$435.8 million in the 1HFY2022 from US$164.0 million on the back of higher palm prices and better performance by the sugar milling operations in India. The higher pre-tax profit was also contributed by the 3% y-o-y growth in fresh fruit bunches production of 2.13 million metric tonnes (MT) for the oil plantation business. The improvement in production was mainly from Indonesia, due to better weather conditions and crop profile.
The others segment, which includes logistics and jetty port services and investment activites, saw pre-tax profit plunge by 73.6% y-o-y to US$2.3 million mainly from investment income from the group’s investment portfolio.
Joint ventures and associates improved by 10% y-o-y to US$153.1 million in the 1HFY2022 mainly due to better contributions from the group’s investments in Europe and Southeast Asia.
As at June 30, Wilmar’s net tangible asset (NTA) per share fell by 0.3% y-o-y to US$3.16.
According to the group, the higher commodity prices led net debt to increase, resulting in a higher gearing ratio of 0.99x as at June 30, from 0.87x as at Dec 31, 2021.
Cash and cash equivalents stood at US$3.42 billion.
The group has proposed an interim dividend of 6 cents, payable on Aug 24.
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Kuok Khoon Hong, chairman and CEO of Wilmar said he believes the group’s business model will “continue to help us achieve long term sustainable growth”.
In his statement, Koh said that the group is “fortunate to be in the agri-processing business as the demand for food products is less impacted by slowing economies as compared to other industries”.
“The recent corrections in commodity prices will hopefully restore some of the demand destroyed by high prices and improve margins in the downstream business. At the same time, whilst palm oil prices have fallen from their peak in 2QFY2022, they remain higher than the pre-Covid period, thus mitigating the effects on oil palm plantation performance,” he says.
“Barring unforeseen circumstances, we are optimistic that performance for the rest of the year will be satisfactory,” he adds.
Shares in Wilmar closed 2 cents higher or 0.49% up at $4.13 on Aug 4.
