SINGAPORE — Wilmar International Limited reported on Feb. 12 that net profit for the year was down 12% to $1.16 billion. Core net profit from operations was down 6% to $1.22 billion.
The lower profit was primarily due to margin contraction in Palm & Laurics during the first nine months of 2014 as well as lower soybean crushing margins.
Wilmar reported a 9% increase in net profit to $401.2 million for the quarter ended Dec. 31, 2014. Core net profit, excluding non-operating items and fair value changes of biological assets, grew 17% to $412.5 million in the quarter.
The higher net profit was due to improved performances in most key segments as well as higher contributions from associates. Palm & Laurics benefited from higher returns from its downstream business. Consumer Products, Sugar and Oilseeds & Grains also contributed positively to net profit. Plantations & Palm Oil Mills was affected by lower production and softer crude palm oil prices.
Oilseeds & Grains posted a pre-tax profit of $39.4 million as crush margins remained positive in the fourth quarter. The profit was lower compared to the $115.6 million achieved in the fourth quarter of 2013 when delayed soybean shipments in the local market resulted in exceptional margin.
For the year, the group recorded a pre-tax profit of $86.7 million (FY2013: $231.7 million). Sales volume was up 11% to 6.5 million tonnes in the fourth quarter and up 10% to 22.7 million tonnes in 2014, mainly supported by higher demand for soybean products and flour.
Palm & Laurics recorded a 9% increase pretax profit to $218.3 million in the fourth quarter. This was mainly due to a combination of lower feedstock costs and stable growth in the group’s downstream Palm & Laurics businesses. However, pre-tax profit fell 31% to $588.1 million for the year, driven by compressed refining margins resulting from excess refining capacity in the industry.
Consumer Products recorded a 5% increase in pre-tax profit to $78.2 million in the fourth quarter, due to margin expansion during the quarter. For the year, pre-tax profit grew a healthy 19% to $261.8 million. During the year, sales volume was up 4% to 5.6 million tonnes, given stronger demand for the group’s flour and rice products and overall strong growth outside China.
“While lower palm, crude oil and sugar prices will negatively impact our plantation, palm biodiesel and sugar milling segments, our processing and downstream businesses should benefit from lower feedstock costs, providing a further boost to the trend of stable volume growth and margin expansion experienced in our downstream businesses these past few years,” said Kuok Khoon Hong, chairman and chief executive officer of Wilmar. “Our biodiesel business should benefit from the recently announced biodiesel policy in Indonesia. As a whole, our integrated business model should enable stable and resilient earnings in 2015.”