SINGAPORE — Net profit at Wilmar International Ltd. increased 26% to $257 million for the first quarter ended March 31, driven by strong performance in the company’s Tropical Oils, Sugar and Consumer Products segments.
Revenue for the year decreased 6.2% to $10.45 billion, down slightly from $11.13 billion in the same period of last year. While overall sales volume increased 5% during the quarter, lower commodity prices reduced total revenue.
“The group reported a reasonably good set of results in the first quarter of 2019, given the tough operating environment,” said Kuok Khoon Kong, chairman and chief executive officer (CEO) of Wilmar. “The improved performance by both Tropical Oils and Consumer Products businesses since the second quarter of 2018 has been encouraging. With the exception of sugar milling and palm plantation, most of our businesses are doing reasonably well. Further, crushing margins are also expected to improve in the second quarter of 2019. We are cautiously optimistic that performance for the rest of the year will be satisfactory.”
The Oilseeds & Grains segment’s pretax profit for the first quarter of 2019 was $91.1 million, down from $172.6 million compared with the first quarter of 2018. The segment saw stronger contributions from the Consumer Products, Rice and Flour Milling businesses.
“These helped offset the weaker results from the crushing business, which had been impacted by the African swine fever (AFS) outbreak in China and a sharp drop in Brazilian soybean basis,” Wilmar said. “Nonetheless, the negative impact was mitigated by reduced crushing activities and good management of the group’s soybean position.”
Lower meal demand due to AFS outbreak impacted the 4% decline in the Oilseeds & Grain segment’s sales volume to 8.5 million tonnes in the first quarter of 2019 from 8.9 million tonnes in the first quarter of 2018.
The Tropical Oils pretax profit for the first quarter increased 81% to $183.8 million, up from $101.7 million in the first quarter of 2018.
“Boosted by stronger performance from the manufacturing and merchandising businesses due to better sales volumes and margins,” the company said. “This was partially offset by lower crude palm oil prices and production yields, which reduced the contributions from the plantation business.”
Wilmar’s business activities include oil palm cultivation, oilseed crushing, edible oils refining, sugar milling and refining, manufacturing of consumer products, specialty fats, oleochemicals, biodiesel and fertilizers as well as rice and flour milling. At the core of Wilmar’s strategy is an integrated agribusiness model that encompasses the entire value chain of the agricultural commodity business, from cultivation, processing, merchandising to manufacturing of a wide range of branded agricultural products. It has more than 500 manufacturing plants and an extensive distribution network covering China, India, Indonesia and some 50 other countries. The group has a multinational workforce of about 90,000 people.