SINGAPORE (Aug 13): Wilmar International reported a 52.3% decrease in net profit from continuing operations to nearly US$150.9 million ($209.5 million) for 2Q19 ended June from US$316.4 million in 2Q18 a year ago.

The agribusiness group said this was mainly due to lower crush margin for the quarter as the impact of the African swine fever outbreak on soybean meal demand was greater than previously expected. However, this was partially offset by strong performances from Consumer Products and Oleochemicals.

Earnings per share on a fully diluted fell 52% to 2.4 US cents in 2Q19 from 5.0 US cents in 2Q18.

There was a loss from discontinued operations of US$33.8 million recorded in 2Q19 and US$55.5 million in 1H19 was mainly due to operating losses and finance costs incurred by the Brazilian operations under Shree Renuka Sugars. Profit from continuing operations, net of tax, fell 49.6% to US$173.8 million

Revenue for 2Q19 decreased 9% to US$9.78 billion from US$10.75 billion a year ago, due to lower commodity prices, partially offset by a 4% increase in sales volume.

Tropical Oils (Plantation, Manufacturing & Merchandising) reported a 15% increase in pretax profit to US$177.3 million in 2Q19 from a year ago boosted by stronger performance from the manufacturing and merchandising business, on the back of higher sales volume during the quarter. This was partially offset by lower crude palm oil (CPO) prices and production yields, which reduced contributions from the plantation business.

Oilseeds & Grains (Manufacturing & Consumer Products) registered a lower pretax profit of US$59.2 million in 2Q19, mainly due to the absence of strong crush volume and margins experienced in 2Q18.

Sugar (Milling, Merchandising, Refining & Consumer Products) reported a pretax loss of US$69.4 million in 2Q19 mainly due to the consolidation of Shree Renuka Sugars which became a subsidiary in June 2018. The Australian and Indonesian operations performed better.

Joint Ventures & Associates recorded lower contributions of US$21.9 million for 2Q19 from US$49.6 million a year ago, mainly due to weaker performance from the group’s China associates.

As at end June, total assets stood at US$46.18 billion while shareholders’ funds was US$16.22 billion. Net debt decreased by US$1.01 billion to US$12.45 billion. Correspondingly, net gearing ratio improved to 0.77x in 1H19 from 0.84x in 1H18.

For the 1H19 ended June, earnings decreased by 21.5% to US$407.9 million from a year ago while revenue declined 7.6% to US$20.2 billion.

Wilmar’s board has proposed an interim tax exempt dividend for 1H19 of 3 cents per share which will be payable on August 30.

In his outlook statement, Kuok Khoon Hong, Chairman and CEO, says, “We have submitted our application to list our China operations on the Shenzhen Stock Exchange. With the disclosure of our China operations in the Prospectus, there is now a better understanding and appreciation of the Group’s China operations...We have built similar operations in many countries including Indonesia, India, Vietnam and in many African countries. We strongly believe that these operations, when fully mature, will enjoy similar good returns in the future. We will continue to expand our operations in our core businesses as we believe the future for food demand is in Asia and Africa. Barring any unforeseen circumstances, we expect the margins of our crushing business and other segments to perform better in the remaining half of the year.”

Shares in Wilmar closed 3 cents higher at $4.05 on Tuesday, before the announcement of results.