28/02/2008 (Bloomberg) - Wilmar International Ltd., the world's biggest palm oil trader, said fourth-quarter profit jumped fivefold after prices rose to a record and it made acquisitions to benefit from increased demand.

Net income climbed to $234 million, or 5.15 cents a share, from $43.9 million, or 1.89 cents a share, a year earlier, the Singapore-based company said today in a statement to the stock exchange. Sales rose to $6.5 billion from $2.2 billion.

Wilmar, Singapore's second-most valuable listed company, supplies about 45 percent of retail cooking oil in China. The Asian nation imported 25 percent more vegetable oils last year as increased incomes stoked demand, boosting palm oil prices.

``Wilmar is in a strong position to benefit from rising Chinese demand,'' Ben Santoso, a plantation analyst at DBS Vickers Securities (Singapore), said before the results were announced.

Wilmar is the best performer of the 30 companies on the Straits Times Index over the past 12 months, more than doubling, compared with the benchmark's 2 percent advance. The stock retreated 1.4 percent to S$4.86 yesterday.

For the full year, Wilmar's profit rose to $580.4 million, or 12.78 cents a share, from $215.9 million, or 9.31 cents a share, in 2006. That compares with the median forecast of $524.4 million, according to 12 analysts' estimates tracked by Bloomberg.

`Significantly Undervalued'
``Wilmar is significantly undervalued,'' said Santoso, who rates the stock as a ``buy'' and had forecast 12-month profit of $496 million. It ``benefits from economies of scale, being one of the largest integrated players in the world.''

Wilmar was worth S$31 billion ($22 billion) as of yesterday's close, outranked on the Singapore Stock Exchange only by Singapore Telecommunications Ltd. The palm oil company's stock was added to the benchmark Straits Times Index last month.

Palm oil prices averaged 2,866 ringgit ($890) a metric ton in the final quarter of last year, 66 percent higher than the same quarter in 2006, according to data from the Malaysian Derivatives Exchange.

It's the first time Wilmar has reported full-year earnings after acquiring four companies, including IPT Assets and Kuok Group, with 2006 results re-stated to reflect the acquisitions.

Malaysian Merger
Mergers and acquisitions gathered pace last year in the palm oil industry. Malaysia's Sime Darby Bhd. became the world's largest palm oil grower after a merger with Kumpulan Guthrie Bhd. and Golden Hope Plantations Bhd.

``Continued expansion of our existing operations and expansion in similar businesses in new geographical locations will position us for the next phase of growth,'' Chief Executive Officer Kuok Khoon Hong said in the statement.

Earnings last quarter also included a one-time charge of $61.5 million to account for a share grant to employees, the company said in the statement. Expenses for its mergers and convertible bonds also resulted in a one-time charge of $16 million.

Wilmar also had a gain of $88.5 million after the value of its biological assets increased, the statement said.

Higher food prices have boosted consumer prices in China, India and Indonesia, the three most populous countries in Asia. China on Jan. 16 named Wilmar among companies that must seek state permission from the National Development and Reform Commission before raising the prices of staple foods.

Inflation in China was 7.1 percent in January, the quickest pace in more than 11 years after the worst storms in half a century destroyed crops such as grains, oilseeds and vegetables.

``As prices go up, governments will act,'' said DBS Vickers Santoso. ``Already you see some price controls.''

Wilmar also declared a final dividend of 2.6 Singapore cents a share.