The company did report a net profit for the first quarter ended March 31 of $239.4 million.
The second-quarter losses are largely attributed to the manufacturing sub-segment within Oilseeds and Grains and partially to the Sugar segment.
Untimely purchases of raw materials, specifically soybeans, in a highly volatile and disruptive market, resulted in significant losses being recorded in the segment, Wilmar said. Also unexpected flooding in Argentina affected the soybean harvest, and heavy participation by funds in the futures markets, among other factors, contributed to the very volatile markets.
Notwithstanding the one-time loss in the second quarter, the companies’ model remains intact and resilient, it said. The long-term prospects of the company are stronger as it continues to execute on its stated growth strategy, demonstrated by recent ventures in Vietnam and India.
On July 5, Wilmar and Bunge announced a joint venture in Vietnam. Bunge will sell 45% of its equity in its Vietnam crush operations to Wilmar, creating a three-party joint venture with Bunge and Wilmar as equal 45% shareholders and Quang Dung – a leading soybean meal distributor in Vietnam and majority owner of Green Feed, a growing Vietnamese feed milling business – retaining its existing 10% stake in the operations.
Adani Wilmar and Rucha Soya agreed on May 25 to combine their procurement, marketing, distribution and sales businesses. The manufacturing requirements of the joint venture company are proposed to be fulfilled by Adani Wilmar and Ruchi Soya. It is proposed that Adani and Wilmar will, through Adani Wilmar, jointly hold an equity stake of 66.66% in the joint venture company, and Ruchi Soya will hold 33.34%. A non-binding term sheet has been signed in this regard.
Barring unforeseen circumstances, operating environment for the company for the rest of the year is expected to normalize, the company said. This profit warning is based on a preliminary review of unaudited financial results for Wilmar’s second-quarter earnings.
The company will release its unaudited consolidated financial results for its second quarter and first half of 2016 on Aug. 11.