27/02/2009 (Bloomberg) - Wilmar International Ltd., the world’s biggest palm oil trader, said that profit in 2009 may not be better than this year’s amid the global recession, and the company may be looking for food-industry acquisitions.

“We’ll continue to grow this year, but profit-wise, it may not be better than last year, but it looks okay,” Chief Executive Officer Kuok Khoon Hong said today after briefing analysts on a 60 percent gain in fourth-quarter profit. Wilmar, which has $1.1 billion in cash on hand, may seek acquisitions when valuations drop further, Kuok said in an interview.

Wilmar, which supplies about 45 percent of China’s retail cooking oil, may be seeking to take advantage of lower asset prices to expand during the worst financial crisis since the Great Depression. The Singapore-based company’s fourth-quarter profit was bolstered as a fall in palm oil prices reduced costs.

Slowing demand in China means “the outlook is not going to be as buoyant this year as it was last year,” Ben Santoso, an analyst at DBS Vickers Securities Singapore, said today by phone. The quarter’s results “are in line with our expectations.”

Fourth-quarter profit gained to $373.6 million, or 5.85 cents a share, from $234 million, or 3.66 cents, a year earlier, the company said today in a statement before the start of trade. Revenue fell to $5.8 billion from $6.5 billion and sales by weight rose 4 percent to 8.54 million metric tons, it said.

Wilmar rose 5.9 percent to S$2.88, the biggest gain in a month, as the Straits Times Index dropped 2.1 percent. Today’s advance left the stock 3.2 percent higher this year, better than the benchmark’s 9.5 percent fall.

‘Not Going to Collapse ‘

Full-year profit in 2009 “is not going to collapse, like some analysts said,” Kuok said. “We will not be down 15 percent, or 40 percent, as some people say.” Full-year profit in 2008 more than doubled to $1.53 billion, according to the results statement.

Wilmar’s 2009 profit is forecast to be $1.12 billion, according to the median estimate in a Bloomberg survey of eight analysts. That’s 27 percent lower than 2008’s performance, according to Bloomberg calculations based on today’s release.

For potential acquisitions, “we’re looking at something related to what we are doing right now, not necessarily plantations,” Kuok said in the interview, which followed the analysts’ briefing. “Prices are not cheap yet, so we don’t buy.” He didn’t elaborate.

Volumes Improve

Wilmar’s sales volumes in the first two months of this year, including shipments to China, were better than in the same period last year, Kuok told analysts at the briefing.

China, the only one of the world’s three largest economies that’s still growing, expanded 6.8 percent in the fourth quarter, the slowest pace in seven years. The world’s most populous nation is the largest consumer of both soybeans and palm oil.

Wilmar said the cost of sales in the fourth quarter fell 11 percent to $5.16 billion, according to the results statement. Interest income in the quarter jumped more than fourfold to $40.6 million from $8.6 million a year ago as the cash held on short-term deposits rose, according to the statement.

Crude palm oil futures in Kuala Lumpur averaged about 1,610 ringgit ($439) a ton in the fourth quarter compared with about 2,866 ringgit in the same period a year earlier as the global recession hurt demand.