Wilmar’s net profit inched up 1.5% to $545m in Q3

Thanks to higher oilseed crushing profit.

Wilmar International reported a net profit of $545m in the third quarter, up 1.5% year-on-year thanks to higher profits from its oilseed crushing business.

According to Barclays, oilseed crushing margins improved in 3Q14 due to cheaper imported soybeans and stable selling prices, but lower palm oil prices and depressed palm oil refining margins offset the higher volumes Wilmar achieved in the quarter in its plantation, palm and laurics divisions.

“Overall we expect oilseed crushing margins to stabilise at current levels as an expected record crop from South America should keep prices low and supply abundant. Net debt was lowered by 9% vs the beginning of the year due to strong operating cash flow,” noted Barclays.

Here’s more from Barclays:

Palm Oil: Higher FFB output as a result of better yield per hectare provided more supply to Wilmar's own CPO mills and a 49% jump in PBT in the upstream business, but a competitive palm oil refining industry led to lower margins, which shaved off 49% of the downstream PBT y/y. Operating costs benefited from lower fertiliser costs.

Oilseeds & grains: The division was the highlight of the quarter as the oilseed crushing margin continued to improve from the previous quarter due to lower raw material costs, while the company flagged an expected improvement in the grains business as the traditional festive season approaches with crushing margins guided to remain positive in 4Q14.

Consumer products: Lower feedstock costs were the driving factor behind the 29% y/y improvement in PBT in the division despite lower ASP.

Sugar: Although sugar milling in 3Q14 was negatively affected by rain, resulting in a 14% drop in volumes, we expect cane crushing to simply be extended further into 4Q and annual volumes should remain constant. Merchandising achieved record volume and PBT as performance from its refineries improved.