SINGAPORE (Mar 11): Wilmar International recorded a 12.7% drop in earnings to US$224.3 million (S$316.7 million) for the 1Q2020 ended March, from earnings of $257.0 million a year ago.

In a filing to Singapore Exchange (SGX) on Monday, the group says the lower net profit was mainly due to the mark-to-market losses on the group’s investment securities. Lower demand from the hotel/restaurant/catering (HORECA) businesses and food processing industries, which were negatively impacted due to the pandemic-caused lockdowns in Wilmar’s major markets, also contributed to the decline.

Revenue rose 4.6% y-o-y to US$10.92 billion this quarter from last year’s $10.44 billion, on increased household consumption following strict movement measures, which led to strong demand for the group’s consumer products.

The group’s sales volume for consumer products grew by 34.8% to 2.9 million per million tonnes (MT) in 1Q2020 mainly from increased demand on staples such as rice, flour, and cooking oil. It was offset by a 20% fall in medium pack and bulk buys from its HORECA businesses and food processing industries, as less people dined out.

Total sales volume for oilseeds and grains improved by 17.3% to 4.3 million MT. Tropical oils sales volume dipped 9.9% to 5.2 million MT due to the slowdown in certain destination markets.

Shareholders’ funds have reduced marginally by 1.4% to US$16.52 billion mainly due to balance sheet translation losses with the appreciation of the US dollar during 1Q2020.

The group generated strong positive cashflow of US$1.94 billion from operating activities on the back of better-operating profit and lower working capital requirements as commodity prices declined during the quarter.

Consequently, net debt also reduced by US$1.43 billion to US$11.79 billion as at March 31. 

The group has unutilised banking facilities amounting to US$22.55 billion as at March 31.

In its outlook, the group expects to continue its strong growth in 2Q2020, including the demand for HORECA products with the easing of lockdown measures. It also remains “cautiously optimistic” on its second quarter operations if China’s economy recovers as expected.

With effect from this quarter, the group has adopted a new segment classification for reporting its segment revenue and results, which better reflects the Group’s core businesses and strategy.

Shares in Wilmar International closed 7 cents higher, or 2.0% up, at $3.54.