Wilmar profits plummet 94% to $50.5m in Q2

No thanks to weaker contributions from tropical oils and oilseeds and grains segments.

Wilmar International posted a 93.7% drop in profits by 93.7% QoQ to $50.5m (US$37m) in Q2.

On a YoY basis, however, earnings significantly improved from last year’s net loss of $300m (US$220m), thanks to better performances from its oilseeds and grains unit, CIMB said in a flash note.

The weak quarterly performances were from lower contributions from the tropical oils and
oilseeds and grains segments, plus higher losses from the sugar division.

Oilseeds and grains recovered from one-off losses in Q2 last year, partially offset by weaker YoY results from tropical oils.

Moreover, Wilmar cited challenging operating conditions in merchandising and processing businesses of tropical oils and sugar as the cause of weak Q2 earnings.

Currently, Wilmar has an interim tax-exempt dividend of 3 cents per share, which increased 20% YoY.

Here's more from CIMB:

The oilseeds and grains division was the largest earnings growth driver for the group in 2Q17 and 1H17. This division turned around to record a US$275m pretax profit in 1H17 against a loss of US$175m in 1H16 on the back of higher crush volume and positive crush margins. However, pretax profit from this division fell 71% qoq as pretax profit per tonne for this division fell 74% qoq to US$8 per tonne.

The tropical oils segment (plantations and palm oil processing) posted a 67% qoq and 68% yoy decline in 2Q17 PBT to US$60m due to the challenging operating environment faced by its merchandising and processing business. This more than offset the 32% yoy rise in FFB output from its upstream estates in 2Q17. The sugar division also posted higher pretax losses of US$106.8m in 2Q17 due to weaker performance from the sugar merchandising and refining division.

The group expects its tropical oils division to perform better in 2H17 on the back of improvements in production yields and better margins from downstream operations. The group also indicated that oilseeds crush margins are expected to stay positive for the year and consumer products are set to improve as they enter seasonal peak period. However, the sugar business will continue to be affected by volatility in sugar prices.