MARKET DEVELOPMENT
Wilmar Sees Better Crush Margins, Volume
Wilmar Sees Better Crush Margins, Volume
11/05/2015 (Borneo Post) - Wilmar International Ltd (Wilmar) reported net profit of US$241.2 million which represents a 39.9 per cent decline on a quarterly comparison, but an increase of 22.8 per cent year on year (y-o-y).
The group’s revenue declined on both quarter on quarter and y-o-y basis, largely reflecting lower commodity prices, says analysts at TA Securities Holdings Bhd (TA Research).
Its core net profit of US$263.3 million meanwhile translates into 36.2 per cent lower q-o-q but rose 22.8 per cent y-o-y.
Earnings was lower q-o-q, it said, due to lower income contributed by the palm products segment and seasonal loss incurred by the sugar segment.
“The jump was attributable to sharply higher income from the Oilseeds and Grains segment and increase in associate income, mainly India and China,” TA Research said.
“All in, the core earnings accounted for 20 per cent of both ours and consensus’ average estimate.” Note that the group had also changed the segmental reporting method.
“Palm and Laurics and the upstream plantation have been lumped up as Tropical Oils.
Consumer Products have been combined with Oilseeds and Grains.
Profit before tax of each segment is stated as a single figure.
“The effect is that we are unable to calculate PBT/tonne for the manufacturing part of the palm, oilseeds and consumer products,” it said.
Crude palm oil (CPO) production declined by 11.6 per cent y-o-y due to impact of wet weather in Malaysia and a decline in area harvested.
The manufacturing sub-segment, meanwhile, was negatively impacted by the excess refining capacity in Indonesia.
The segment posted a 44.2 per cent contraction in 1Q15 PBT to US$152.1 million.
As for its Oilseeds and Grains division, total revenue declined by 3.4 per cent y-o-y due to lower selling prices.
However, sales volume was higher, boosted by 13.1 per cent increase in the manufacturing sub-segment, thanks to higher crushing volume and expansion in grains operations.
Consumer products volume rose by a smaller three per cent.
“PBT of the segment however jumped to US$166.1 million, attributable to improved crushing margin and lower feedstock cost boosting the consumer products margin.
“Its sugar division revenue rose by nine per cent y-o-y on the back of higher merchandising activities.
The segment, however, reported a larger US$68 million PBT loss, attributable to weaker performances of the Indonesian refineries.” Looking ahead, TA Research said Wilmar’s crush margin is expected to remain positive going into mid-2015.
That will benefit the Oilseeds and Grains segment.
So far, crushing activities had benefited from lower imports by financial traders.
“We highlight, however, crushing margin tends to be volatile, and it remains to be seen how the large supply of soybeans expected in 2H15 will impact margin.
“In the Tropical Oils segment, we continue to see margin risk, although some “upside cold” comes from the recently introduced USD50/tonne export tax on CPO, and the Indonesian government’s aggressive push on the biodiesel mandate.”
The group’s revenue declined on both quarter on quarter and y-o-y basis, largely reflecting lower commodity prices, says analysts at TA Securities Holdings Bhd (TA Research).
Its core net profit of US$263.3 million meanwhile translates into 36.2 per cent lower q-o-q but rose 22.8 per cent y-o-y.
Earnings was lower q-o-q, it said, due to lower income contributed by the palm products segment and seasonal loss incurred by the sugar segment.
“The jump was attributable to sharply higher income from the Oilseeds and Grains segment and increase in associate income, mainly India and China,” TA Research said.
“All in, the core earnings accounted for 20 per cent of both ours and consensus’ average estimate.” Note that the group had also changed the segmental reporting method.
“Palm and Laurics and the upstream plantation have been lumped up as Tropical Oils.
Consumer Products have been combined with Oilseeds and Grains.
Profit before tax of each segment is stated as a single figure.
“The effect is that we are unable to calculate PBT/tonne for the manufacturing part of the palm, oilseeds and consumer products,” it said.
Crude palm oil (CPO) production declined by 11.6 per cent y-o-y due to impact of wet weather in Malaysia and a decline in area harvested.
The manufacturing sub-segment, meanwhile, was negatively impacted by the excess refining capacity in Indonesia.
The segment posted a 44.2 per cent contraction in 1Q15 PBT to US$152.1 million.
As for its Oilseeds and Grains division, total revenue declined by 3.4 per cent y-o-y due to lower selling prices.
However, sales volume was higher, boosted by 13.1 per cent increase in the manufacturing sub-segment, thanks to higher crushing volume and expansion in grains operations.
Consumer products volume rose by a smaller three per cent.
“PBT of the segment however jumped to US$166.1 million, attributable to improved crushing margin and lower feedstock cost boosting the consumer products margin.
“Its sugar division revenue rose by nine per cent y-o-y on the back of higher merchandising activities.
The segment, however, reported a larger US$68 million PBT loss, attributable to weaker performances of the Indonesian refineries.” Looking ahead, TA Research said Wilmar’s crush margin is expected to remain positive going into mid-2015.
That will benefit the Oilseeds and Grains segment.
So far, crushing activities had benefited from lower imports by financial traders.
“We highlight, however, crushing margin tends to be volatile, and it remains to be seen how the large supply of soybeans expected in 2H15 will impact margin.
“In the Tropical Oils segment, we continue to see margin risk, although some “upside cold” comes from the recently introduced USD50/tonne export tax on CPO, and the Indonesian government’s aggressive push on the biodiesel mandate.”