SINGAPORE (May 10): Wilmar International recorded a 40.6% drop in earnings to US$203.3 million ($273.0 million) for the 1Q ended March, from restated earnings of US$342.0 million a year ago.
In a filing to SGX on Thursday, the group says the lower profit was mainly due to the difficult operating environment in Tropical Oils businesses and seasonal sugar losses experienced during the quarter.
1Q18 revenue grew 5.7% to US$11.17 billion, from US$10.57 billion a year ago. This was on the back of stronger sales volume recorded by Oilseeds & Grains businesses, further aided by its higher commodity prices.
Finance income doubled to US$103.2 million during the quarter, led by higher average deposits and effective interest rates. Correspondingly, finance costs jumped 35.3% to US$155.1 million in line with higher effective interest rates and increased average borrowings made during the period.
Selling and distribution expenses rose 16.0% to US$515.9 million, mainly due to increased advertising and promotional activities undertaken as a result of the later Chinese Spring Festival in 2018.
Administrative expenses, mainly comprising of personnel and its related costs, climbed 8.5% to US$185.2 million
As at end March, cash and cash equivalents stood at US$1.92 billion.
“The prospect of China imposing import tariffs on US soybeans will result in soybean prices staying volatile for the coming quarters. Even though performance of our Oilseed Crushing business will not be affected in the short term, a prolonged standoff between China and the US would affect the utilisation of our crushing plants,” says Kuok Khoon Hong, chairman and CEO of Wilmar.
“Nevertheless, we foresee that any negative effect will be partially mitigated by better performances from both our flour and rice businesses. In addition, with the improvements in production yields and better margins from downstream operations, the Tropical Oils segment will likely perform better in the subsequent quarters,” he adds.
Overall, the group says it is cautiously optimistic that performance for the rest of the year will be “satisfactory”.
Shares of Wilmar closed 4 cents down, or 1.2% lower, at $3.21 on Thursday.