Singapore / SG. (wi) Wilmar International Limited, Asia’s leading agribusiness group, reported on May 10, 2018 (hm, hm, hm …) a 41 percent decrease in net profit to US USD 203.3 million for the quarter ended March 31, 2018 («1Q2018») (1Q2017: US USD 342.0 million). The lower profit reflected the difficult operating environment for Tropical Oils and seasonal Sugar losses during the quarter. Nonetheless, the Group continued to achieve strong sales growth in Oilseeds + Grains, arising from higher crushed volume and the later Chinese Spring Festival in 2018.
The increase in Oilseeds + Grains sales volume as well as higher commodity prices, drove revenue up by 6 percent to US USD 11.17 billion in 1Q2018 (1Q2017: US USD 10.57 billion).
Business Segment Performance
Tropical Oils (Plantation, Manufacturing + Merchandising) recorded a pretax profit of US USD 101.7 million in 1Q2018 (1Q2017: US USD 155.2 million) amidst headwinds faced by the industry. While plantation production yield and sales volume improved during the quarter, overall results were impacted by lower crude palm oil prices and poor margins in the downstream businesses. Production yield in 1Q2018 improved 7 percent to 4.9 metric tonnes («MT») per hectare (1Q2017: 4.6 MT per hectare) due to favourable weather conditions, resulting in a 5 percent increase in the production of fresh fruit bunches to 984,998 MT (1Q2017: 938,771 MT). Sales volume for Tropical Oils Manufacturing and Merchandising increased marginally to 5.7 million MT in 1Q2018 (1Q2017: 5.7 million MT).
Oilseeds + Grains (Manufacturing + Consumer Products) posted a pretax profit of US USD 172.6 million in 1Q2018 (1Q2017: US USD 207.7 million), supported by satisfactory performance in Oilseed Crushing and Consumer Products. Overall sales volume saw a strong 24 percent increase to 8.9 million MT in 1Q2018 (1Q2017: 7.1 million MT), given the higher crushed volume and Consumer Products sales due to the later Chinese Spring Festival in 2018.
Sugar (Milling, Merchandising, Refining and Consumer Products) reported a pretax loss of US USD 39.0 million in 1Q2018 (1Q2017: US USD 34.5 million loss), mainly from weaker Milling results which were mitigated by steady performance from the Merchandising business. Sales volume for Sugar decreased 12 percent to 2.2 million MT in 1Q2018 (1Q2017: 2.5 million MT) as a result of lower Milling and Merchandising activities. The anticipated increase in sales volume in the Australian Milling business, arising from the new Sugar marketing programme introduced in FY2017, is expected to be recognized in subsequent quarters.
The Others segment recorded a pretax profit of US USD 36.1 million in 1Q2018 (1Q2017: US USD 70.3 million) mainly from the Shipping and Fertilizer businesses, as well as dividend income from the Group’s investment portfolio. Absence of investment gains during the quarter, due to the weaker equity market conditions, led to lower profits in this segment.
Share of results of Joint Ventures + Associates saw a marginal decrease to US USD 41.5 million in 1Q2018 (1Q2017: US USD 42.0 million). The stronger performances by the Group’s African and Indian investments were offset by weaker contributions from associates and joint ventures in China and Vietnam
Strong Balance Sheet
As at March 31, 2018, total assets stood at US USD 43.48 billion while shareholders’ funds was US USD 16.49 billion. Lower working capital requirements in 1Q2018 led the Group to record a net cash inflow from operating activities of US USD 1.83 billion. Correspondingly, net debt decreased by US USD 1.40 billion to US USD 11.21 billion, while net gearing ratio improved to 0.68x from 0.79x in December 31, 2017.
Kuok Khoon Hong, Chairman and CEO, said, «The prospect of China imposing import tariffs on US soybeans will result in soybean prices staying volatile for the coming quarters. Even though performance of our Oilseed Crushing business will not be affected in the short term, a prolonged standoff between China and the US would affect the utilization of our crushing plants. Nevertheless, we foresee that any negative effect will be partially mitigated by better performances from both our flour and rice businesses. In addition, with the improvements in production yields and better margins from downstream operations, the Tropical Oils segment will likely perform better in the subsequent quarters. «Overall, we are cautiously optimistic that performance for the rest of the year will be satisfactory».