Wilmar to double profits to $446.7m as sugar-crushing season begins

Its soybean division will also experience a rebound.

Wilmar could be this season’s leader in commodity trading, as its sugar-crushing and soybean-crushing businesses soar to better heights.

According to Maybank Kim Eng, a net profit of USD350m is expected, down 16% YoY but double QoQ. The sequential strength could be traced to the start of the sugar-crushing season. Maybank KE also expects some improvements in China’s soybean-crushing margins as feedstock cost dropping during the quarter. Palm & Laurics remains challenged by CPO refining overcapacity but there should be QoQ recovery on margins.

Maybank KE adds that although Wilmar’s sugar-crushing margins may not be great as sugar prices remain at a multi-year low, this could be partly compensated by volume gains.

Here's more from Maybank KE:

Brazil, the world’s largest sugar producer and exporter, has been hit by serious drought this year, which may hurt its sugarcane yields. This could leave its mills with insufficient cane to last the entire crushing season. Crushers outside Brazil, such as Australia, could potentially steal market share. As the biggest crusher in Australia, Wilmar could benefit. Its market-share gain could be even more evident.

Maybank KE also anticipates a recovery in its soybean-crushing margins in China. International soybean prices fell 45% during the quarter. With that, the spread between domestic and international soybean prices widened above CNY1,700/tonne. As Wilmar mainly uses international soybean as feedstock, its soybean-crushing margins should have improved.

As for palm and laurics, the industry continues to reel from overcapacity. CPO refining margins will be lower YoY. QoQ, there could be a recovery from last quarter’s low base.