SINGAPORE (Aug 10): Agribusiness Wilmar International has swung back into the black with earnings of US$60.2 million ($82.1 million) for the 2Q17 ended June, compared to the US$220.1 million loss it posted in the same period a year ago.
The bottomline improvement was driven by recovery in Oilseeds & Grains from the one-off losses in 2Q16, but was partially offset by weaker performances in Tropical Oils and Sugar. There was also higher non-operating gains arising from the group’s investment securities.
The world's largest palm oil processor had posted its first ever quarterly loss in the April-June period last year, citing untimely purchases of soybeans.
Over the quarter, revenue grew 13.2% to US$10.6 billion from US$9.4 billion in the previous year due to higher sales volume from its Oilseeds & Grains and Sugar businesses, as well as stronger commodity prices.
The Tropical Oils segment posted a 68% fall in pretax profit in the Tropical Oils segment to US$59.5 million in 2Q17, which Wilmar attributes to challenging operating conditions faced by the merchandising and processing businesses.
Sales volume from Tropical Oils manufacturing & merchandising came in at 5.8 million metric tonnes (MT), unchanged from a year ago, whereas production yield for plantations improved 32% to 5.3MT per hectare versus 3.9 MT per hectare in 2Q16, as the effects of El Nino eased.
Fresh fruit bunches (FFB) production grew 32% to 1 million MT compared to 0.8 million MT in the previous year.
On the other hand, Oilseeds & Grains recovered from its US$343.8 million loss in 2Q16 to report a pretax profit of US$61.1 million in 2Q17 due to higher crush volume and positive crush margins.
Sales volume for Oilseeds & Grains manufacturing grew 13% to 6.7 million MT from 5.9 million MT in 2Q16, and also grew 10% to 1.1 million MT for consumer products from 1 million MT a year ago.
The Sugar segment reported a wider pretax loss of US$106.8 million from US$78.7 million a year ago, due to seasonal losses from plant maintenance activities by the group’s milling business in 1H17, as well as weaker performance in the merchandising and refining business.
Sales volume for Sugar nonetheless grew 26% to 3.1 million MT from 2.5 million MT in the previous year from higher merchandising activities.
Boosted by strong performance from the previous quarter, the group reported earnings of US$444.1 million for 1H17, up more than sevenfold from its US$55.3 million in earnings for 1H16.
For the half year, Wilmar has proposed an interim dividend for 3 cents per share, which is 20% higher from the dividend declared in 1H16 and will be payable on Aug 30.
“We expect Tropical Oils to perform better in 2H2017 on the back of improvements in production yields and better margins from downstream operations. Oilseeds crush margins are expected to remain positive for the rest of the year and Consumer Products will improve as it enters its seasonal peak period. However, Sugar will continue to be affected by the volatility in sugar prices,” states Kuok Khoon Hong, chairman and CEO of Wilmar.
“While the group may face short term challenges, we remain very optimistic about the tremendous growth prospects of our various businesses and will continue with our expansion plans, especially in China, India and Indonesia.”
Shares in Wilmar closed flat at $3.42 on Thursday.
