12/08/2011 (Bloomberg) - Wilmar International Ltd. (WIL), the world’s biggest palm-oil processor, reported a 14 percent increase in second-quarter profit as sales rose to the highest in at least five years.

Net income climbed to $393.1 million, or 6.1 cents a share, from $344.5 million, 5.4 cents, a year earlier, the Singapore- based company said today in a statement. The median estimate of five analysts surveyed by Bloomberg was for profit of $420 million.

Wilmar is benefiting from the 20 percent drop in a crude palm-oil prices in the first half as well as the easing of price caps on cooking oil in China, where it has about a 50 percent share of the market for processed cooking oils. Yesterday, Golden Agri-Resources Ltd. (GGR), the second-largest palm oil-planter, said second-quarter profit almost tripled.

“Despite a more difficult operating environment in the second quarter, margins improved,” Wilmar said. While revenue climbed, the volume of palm and laurics sales fell because of “demand rationing at higher price levels, coupled with uncertainties in the global economic environment.”

Wilmar gained 2.4 percent to S$5.23 a share at 11:11 a.m. in Singapore, paring this year’s decline to 7.5 percent. That compares with the 11 percent drop on the benchmark Straits Times Index this year.

Revenue climbed 56 percent to $10.6 billion, the highest in at least 20 quarters.

Improved Margins
UOB Kay Hian brokerage said today it has its “hold” rating on Wilmar under review as the company delivered on an expected improvement in margins in China.

Separately, Wilmar also said today that Chief Financial Officer Heng Hang Song Francis will resign without giving further details.

China imposed curbs on prices since September last year as part of measures to curb inflation, which raced to 6.4 percent in June, the fastest pace since 2008. The central bank has raised interest rates five times since October to stem the gains. The price-controls worsened losses among soybean crushers. Wilmar said Aug. 2 it will raise cooking oil prices by 5 percent.

Premier Wen Jiabao said last month that stabilizing prices remains the top priority, after food costs soared 14 percent in June. Pork, a Chinese staple, rose 57 percent.

Merchandising and processing, Wilmar’s biggest earner, reported a 61 percent advance in second-quarter pretax profit, while the contribution from plantations and palm-oil mills rose 31 percent as margins expanded. The sugar milling unit had a pretax loss of $7.1 million.