Wilmar International, Asia’s leading agribusiness group, posted a 15% decline in net profit to US$344.5 million ($469 million) for the quarter ended June 30, 2010 (2Q2010).

Wilmar says net profit excluding non-operating items grew 13% to US$380.3 million. Net profit in 2Q2010 was affected by a negative change in valuation of US$41.7 million for convertible bonds, partially offset by a net income from other investments of US$6.2 million, whereas net profit for the quarter ended June 30, 2009 (2Q2009) was increased by a positive valuation of US$38.4 million for convertible bonds and a net income from other investments of US$38.0 million.

Margins in 2Q2010 were lower but satisfactory across most business segments as the group enjoyed significant margin enhancement after the global financial crisis in 2Q2009.

The group reported growth in overall sales volume supported by a significant manufacturing presence and distribution network in major consuming markets. Revenue was up 18% to US$6.8 billion on the back of increased sales volume and higher average selling prices.

Group net profit for the half year ended 30 June, 2010 declined 5% to US$745.9 million while revenue increased 27% to US$13.5 billion. Net profit excluding non- operating items grew 9% to US$772.1 million.

Merchandising & Processing
Palm & Laurics sales volume grew a healthy 8% to 5 million metric tonnes, pretax profit recorded a 32% drop to US$127.2 million as margins contracted in tandem with poorer industry refining margins from tighter supply of crude palm oil (CPO) and relatively less competitive pricing of palm oil compared to other edible oils. Oilseeds & Grains registered a 47% improvement in pretax profit to US$145.8 million as sales volume rose by 27% to 5 million MT, due mainly to the commencement of new plants for oilseeds crushing, flour and rice milling. Margins were higher due to the timely purchases of raw materials and sales of products.

Consumer Products did well in 2Q2009 as it benefited from an increase in selling price in May 2009 and low feedstock cost. Therefore, on a year-on-year comparison, this segment recorded a significant drop of 49% in pretax profit to US$31.5 million. Sales volume dropped marginally to 703,000 MT as 2Q2009 enjoyed stronger sales from stock build-up of consumer pack oils by distributors ahead of an anticipated price increase.

Plantations & Palm Oil Mills saw a decline of 24% in pretax profit to US$76.6 million mainly due to lower average CPO price realised for the Group’s own fruits compared to 2Q2009. In addition, unit production cost in 2Q2010 was higher as a result of a decline in production yield. Yield dropped 10% to 4.51 MT per hectare in 2Q2010 as a result of lower yield of newly matured hectarage and wet weather in most parts of Sumatra which affected harvesting.

Others segment saw a decline of 29% to US$32.6 million despite improved performance from shipping and fertilizer. The lower pretax profit was due to a lower gain from other investments on the back of weaker global equity markets.

Wilmar has declared an interim tax exempt (one-tier) dividend of $0.032 per share.