Revenue for the second quarter was $9.367 billion, up slightly from $9.284 billion in the same period of last year.
On July 19, Wilmar’s board of directors announced that a net loss of $230 million was expected in the second quarter due to challenging operating conditions and untimely purchases of raw materials, specifically soybeans. Due to the warning Credit Suisse downgraded its rating of Wilmar International to “underperform” from “neutral” on July 20. The rating means the stock’s total return is expected to underperform the relevant benchmark over the next 12 months.
|Kuok Khoon Hong, chairman and chief executive officer.|
“Notwithstanding the one-time loss in the second quarter, the group’s integrated agribusiness model remains intact and resilient,” said Kuok Khoon Hong, chairman and chief executive officer. “The group continues to execute on its stated growth strategy with emphasis on downstream businesses and focusing on high growth Asian and African markets. Recent developments in joint ventures in Vietnam and India strengthen the long-term prospects in these countries. Barring unforeseen circumstances, the group’s performance for the rest of the year is expected to be satisfactory.”
In the second quarter the company’s Oilseeds and Grains segment sustained a pre-tax loss of $343.8 million, which compared to a gain of $115.9 million in the same period of last year. The loss was attributed to an untimely purchase of soybeans in a highly volatile market, the company said. The loss was mitigated by stable performance from the Consumer Products business, which is part of the Oilseeds and Grains segment. Consumer Products revenue was $1.157 billion, down 5.3% from $1.222 billion in the same period of last year. Total sales volume for Consumer Products was 1.014 million tonnes.
Revenue for the Oilseeds and Grains segment was $2.801 billion, down 6.1% from $2.984 billion. Sales volume for Manufacturing totaled 5.943 million tonnes.
The company recently formed two joint ventures. In May, Wilmar and Ruchi Soya Industries Limited agreed to combine their procurement, marketing, distribution and sales businesses in India. The manufacturing requirements of the joint venture company were proposed to be fulfilled by Adani Wilmar, a joint venture between Adani Group and Wilmar, and Ruchi Soya. It was 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.
In July, it was announced that Bunge would 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.