Wilmar slammed by not-so-sweet earnings as sugar operations face larger seasonal loss

Sugar operations were hit by a $106m loss in 2Q.

The agribusiness firm’s sugar operations have always been less sweet in 2Q, but it experienced a larger than usual loss this year of US$79m compared to US$37m last year.

According to a report by UOB Kay Hian, the wider losses were a result of the delay in harvesting in Australia due to rainy weather and accounting mark-to-market (MTM) losses on hedges which come on the back of higher sugar prices.

While usually, a loss in 2Q is the signal for better things to come in the next quarter, the report noted that this may not be the case this year.

“Overall earnings from milling might not be as good as we expected due to lower production as a result of the El Nino,” the report said.

The report added that dry weather in Australia has also led to lower sugar yields and will likely lead to lower sugar production in Australia.