Wilmar Q2/2013: Earnings up 87% to 219 Million USD

Singapore / SG. (wi) Wilmar International Limited, Asia´s leading agribusiness group, posted an 87 percent increase in net profit to 218,5 million USD for the quarter ended June 30, 2013 (Q2/2013). Excluding non-operating items, the Group registered an improvement of 42 percent in net profit to 245,4 million USD in Q2/2013. Most key segments recorded improved performance from operations during the period. However, Plantations + Palm Oil Mills continued to be affected by lower crude palm oil (CPO) prices and production yield. Associates also turned in a weaker performance in Q2/2013.

The Group registered strong volume growth in Palm + Laurics, Consumer Products and Sugar. However, revenue was down five percent to 10,43 billion USD for the quarter due to significantly lower palm prices. The Group´s net profit for the half year ended June 30, 2013 (H1/2013) grew 43 percent to 533,9 million USD, while revenue declined four percent to 20,63 billion USD. Net profit excluding non-operating items grew 48 percent to 559,1 million USD in 1H2013.

Business Segment Performance

Palm + Laurics recorded a ten percent increase in sales volume to 6,2 million metric tonnes (MT) in Q2/2013 which was achieved through the Group´s expanded capacity. Robust contributions from downstream value-added products resulted in improved margins and a 40 percent increase in pretax profit to 224,5 million USD.

Oilseeds + Grains registered a two percent decrease in sales volume to 4,5 million MT although flour continued to record volume growth. Crushing margins remained positive and resulted in a pretax profit of 15,3 million USD compared to a loss in Q2/2012.

Consumer Products posted a 22 percent increase in sales volume to 1,1 million MT on the back of stronger demand for edible oils, boosted by price reductions during the quarter. Despite lower prices, margins improved due to lower feedstock costs. As a result, pretax profit rose 67 percent to 29,9 million USD.

Plantations + Palm Oil Mills saw a decrease of 34 percent in pretax profit to 52,7 million USD due to lower average selling price and lower production yield. Production yield was down seven percent to 4,1 MT per hectare as a result of low crop trend in Sarawak and dry weather in Kalimantan and Sumatra, which was slightly mitigated by Sabah´s higher yield from better crop trend. However, as mature hectarage was higher than in Q2/2012, total fresh fruit bunches production was down only two percent to 924’256 MT in Q2/2013.

Sugar comprises the Milling and Merchandising + Processing businesses. In Q2/2013, Sugar reported a pretax loss of 30,3 million USD compared to a pretax loss of 60,3 million USD in Q2/2012. Excluding non-operating items, the pretax loss dropped significantly to 15,6 million USD (Q2/2012: 50,2 million USD pretax loss excluding non-operating items).

The sugar milling season in Australia normally commences in June and it is normal for the Milling division to incur losses due to plant maintenance carried out in the first two quarters of the year. Milling reported a pretax loss of 52,1 million USD compared to a pretax loss of 79,1 million USD in Q2/2012. Excluding non-operating items, the seasonal loss from operations decreased by 39 percent to 44,0 million USD (Q2/2012: 71,9 million USD pretax loss). The improved performance was due to an increase in sales volume as the crush season started earlier compared to the start of the 2012 season which had been hampered by wet weather. Milling sales volume increased by 70 percent to 436’000 MT in Q2/2013.

Merchandising + Processing achieved a 63 percent increase in sales volume to 1,7 million MT from higher merchandising activities and contribution from the Group´s Indonesian refineries. Pretax profit increased by 16 percent to 21,8 million USD. Excluding non-operating items, pretax profit was up 31 percent to 28,4 million USD (Q2/2012: 21,7 million USD). The improved performance was mainly attributed to stronger margins in the Group´s Indonesian refineries which benefited from declining raw material costs.

The Others segment recorded a pretax loss of 33,2 million USD in Q2/2013, mainly due to losses from investment securities and weaker performance in the fertiliser business as a result of declining prices.

Associates saw a decline of 19 percent to 24,9 million USD mainly due to lower contributions from the Group´s associates in Russia, partially offset by better performance by China associates.

Dividend

The Board has proposed an interim tax exempt (one-tier) dividend of S$0,025 SGD per share, payable on August 28, 2013.

Strong Balance Sheet

As at June 30, 2013, total assets stood at 44,58 billion USD while shareholders´ funds was 14,52 billion USD. Net gearing ratio of 0,86x was similar to the 0,85x as at December 31, 2012.

Prospects

Chairman and CEO Kuok Khoon Hong: «The current low CPO prices and declining refining margins in Indonesia add to an already challenging operating environment. However, the benefits of lower raw material prices for downstream products and investments made in recent years, such as the sugar business and expansion into oleochemicals and specialty fats, will have positive contributions for the Group. Together with the strong business model we have built over the years, we will be able to overcome these difficult conditions».

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