Wilmar is in for better days after the soybean curse

Better cash flow can reverse the $296m loss from soybean buys.

Despite Wilmar’s glaring $296 million net loss due to untimely purchases of soybean, the group could look forward into tweaking its risk management policy to prevent such losses from happening in the future.

"We do not expect the group to be right all the time and believe that losses may still occur in the future. However, in the coming quarter, margins should improve," RHB analyst Juliana Cai said.

She noted that the expected growth in consumer products' volume and margins will mute volatilities in Wilmar's soybean margins.

Meanwhile, Wilmar's palm manufacturing segment remains as its strongest driver, as it is expected to increase the group's cash flow by at least 2%.

The group’s improved rice and flour businesses is also expected to boost profitability.

More so, the new proposed joint venture between Adani Wilmar and Ruchi Soya industries will give Wilmar 40% market share in India's consumer packed oil market.

"This will make the group a significant packed oil player in the second-largest populated country in the world. Coupled with potential new consumer products to be put into the available distribution supply chain, we think growth in the consumer space continues to be very exciting for Wilmar," Cai said.