MARKET DEVELOPMENT
Wilmar Quarterly Profit Falls 22% on Shrinking Palm Oil Margins
Wilmar Quarterly Profit Falls 22% on Shrinking Palm Oil Margins
08/08/2014 (Bloomberg) - Wilmar International Ltd. (WIL), the world’s largest palm oil trader, said second-quarter profit fell 22 percent as industry overcapacity hurt margins in palm oil refining.
Net income was $170.7 million in the three months ended June 30, from $218.5 million a year earlier, the Singapore-based company said in a statement. That compares to the range of $240 million to $270 million profit estimated by UOB-Kay Hian Holdings Ltd. Sales rose 0.9 percent to $10.5 billion.
“Overall, we expect much better performance in the second half of the year,” Chief Executive Officer Kuok Khoon Hong said in the statement. “Increased supply of crude palm oil will help to improve Palm & Laurics performance even though operating conditions will remain challenging.”
Wilmar is adding businesses as it seeks new revenue streams outside Indonesian and Malaysian sourced palm oil. It’s in the process of buying Australia’s top baker Goodman Fielder Ltd. and has added sugar assets in Myanmar and India and bolstered packaged foods units on rising demand from consumers in China and other Asian nations.
The stock was unchanged at S$3.24 at the close in Singapore. The announcement came after market.
Excess Capacity
Palm & Laurics saw pretax profit fall 56 percent to $99.8 million on tight supply of crude palm oil and increased competition due to excess capacity industrywide, Wilmar said. Pretax profit at its plantations division more than double to $107.1 million on improved yields and higher palm prices.
Palm oil, the world’s most-used edible oil, has tumbled 23 percent from an 18-month high in March and entered a bear market last month as production in key nations such as Malaysia expanded and demand in food and biofuel trailed estimates. Record U.S. output of soybeans, crushed to make an alternative oil, is adding to global cooking oil supply this year.
Wilmar’s sugar unit narrowed losses to $23.7 million for the quarter, while Consumer Products and Oilseeds posted profit on increased sales.
Wilmar, which is buying Goodman Fielder together with Hong Kong-based investment group First Pacific through a 50-50 venture, won acceptance from the Australian baker’s board for its bid, which it then cut by 3.6 percent in July due to the target firm’s plans to write down asset values.
An independent expert appointed by Goodman Fielder is due to report in September on whether they deem Wilmar and First Pacific’s offer of 67.5 Australian cents a share, or A$1.32 billion ($1.22 billion) for the Sydney-based maker of Wonder White bread fair and reasonable.
Net income was $170.7 million in the three months ended June 30, from $218.5 million a year earlier, the Singapore-based company said in a statement. That compares to the range of $240 million to $270 million profit estimated by UOB-Kay Hian Holdings Ltd. Sales rose 0.9 percent to $10.5 billion.
“Overall, we expect much better performance in the second half of the year,” Chief Executive Officer Kuok Khoon Hong said in the statement. “Increased supply of crude palm oil will help to improve Palm & Laurics performance even though operating conditions will remain challenging.”
Wilmar is adding businesses as it seeks new revenue streams outside Indonesian and Malaysian sourced palm oil. It’s in the process of buying Australia’s top baker Goodman Fielder Ltd. and has added sugar assets in Myanmar and India and bolstered packaged foods units on rising demand from consumers in China and other Asian nations.
The stock was unchanged at S$3.24 at the close in Singapore. The announcement came after market.
Excess Capacity
Palm & Laurics saw pretax profit fall 56 percent to $99.8 million on tight supply of crude palm oil and increased competition due to excess capacity industrywide, Wilmar said. Pretax profit at its plantations division more than double to $107.1 million on improved yields and higher palm prices.
Palm oil, the world’s most-used edible oil, has tumbled 23 percent from an 18-month high in March and entered a bear market last month as production in key nations such as Malaysia expanded and demand in food and biofuel trailed estimates. Record U.S. output of soybeans, crushed to make an alternative oil, is adding to global cooking oil supply this year.
Wilmar’s sugar unit narrowed losses to $23.7 million for the quarter, while Consumer Products and Oilseeds posted profit on increased sales.
Wilmar, which is buying Goodman Fielder together with Hong Kong-based investment group First Pacific through a 50-50 venture, won acceptance from the Australian baker’s board for its bid, which it then cut by 3.6 percent in July due to the target firm’s plans to write down asset values.
An independent expert appointed by Goodman Fielder is due to report in September on whether they deem Wilmar and First Pacific’s offer of 67.5 Australian cents a share, or A$1.32 billion ($1.22 billion) for the Sydney-based maker of Wonder White bread fair and reasonable.