3 segments that deeply dented Wilmar's 2Q results

Despite a growth in volume.

According to Nomura, Wilmar’s 2Q numbers (adjusted net income: US$245mn) came in lower vs Nomura and consensus expectations. Volumes grew, led by sugar and flour business, but crush, sugar refining and CPO margins were significantly weaker q-q.

Refining margins were still strong, led by value added downstream, but Indonesian margins remain at risk. 1H now forms only ~40% of consensus’ FY income.

Here's more from Nomura:

Although 2H should be seasonally better (with stronger sugar and palm contributions), we could still see y-y decline in 2H as palm oil fundamentals are weaker compared to last year. 

Organically, we believe Wilmar is now close to completing build out with strong flour/rice contribution (margins would still grow here) and sugar business close to maturity.

Next leg of growth has to be inorganic, in our view, and we don't rule out Wilmar shopping for assets (eg Sugar in Brazil) as asset valuations, commodity prices and borrowing costs remain low.