Wilmar boasts of US$17.7b funding back-up for upcoming 2013 headwinds

Are the bosses too confident?

According to OCBC Investment Research, going forward, management remains confident that WIL will overcome the difficult environment expected for the rest of 2013. Funding-wise, WIL has access to US$17.7b of total liquidity as of end-Mar, including US$1.7b in cash, which could present WIL with ample firepower for opportunistic M&As.

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Management is keen to continue building infrastructure for its sugar business - it had recently acquired Cosumar in Morocco. While lower palm oil prices will continue to weigh on its Plantation business, cheaper feedstock would boost its downstream businesses, especially Consumer Products.

Separately, WIL notes that the bird flu in China will affect meal consumption in the short term but it does not expect to have a long-term effect. As such, WIL remains optimistic about China’s long-term prospects.

Wilmar International Limited (WIL) posted revenue of US$10.2b, down 2.6% YoY and 12.2% QoQ, meeting 20.5% of our FY13 forecast; this was mainly due to significantly lower selling prices for palm and sugar products. Nevertheless, reported net profit rose 23.3% YoY (but fell 33.9% QoQ) to US$315.4m.

Excluding non-operating items, core net profit jumped 52.6% YoY to US$313.7m; although down 21.8% QoQ, it still met 23.6% of our full-year forecast. 

According to management, the improvement came largely from a sharp recovery in its Oilseeds & Grains business; Consumer Products also benefited from volume growth.