Wilmar Q1 op profit up, raises outlook on palm

15 May 2007 06:04  [Source: ICIS news]

By Anu Agarwal

SINGAPORE (ICIS news)--Singapore’s Wilmar International on Tuesday posted a 48.6% year-on-year rise in first quarter operating profits to $50.6m and said it expects to gain from the promising outlook for palm oil and demand for processed agricultural commodities in Asia.

“As we move closer towards completing the Kuok Group Merger and the IPT acquisition, we will be even better positioned to leverage on the growth potential of the palm oil sector,” said Wilmar chairman and CEO Kuok Khoon Hong.

The enlarged entity has set a target of 40,000 hectares for new planting which will contribute positively towards longer-term earnings, he said.

First quarter operating profit rose on increased sales volumes, higher palm oil prices and higher processing margins, the company said.

The integrated agribusiness group reported first quarter revenues of $1.5bn, up 41% from the same period last year while first quarter net profit rose 66.1% to $26m.

The highest rise in revenue came from the palm and laurics division which posted sales of $1.1bn, up 64% from last year, as a result of stronger demand, firmer selling prices and increased production on capacity expansions that came onstream in the third quarter last year, Wilmar said.

Demand was steered by China, India and countries in Eastern Europe and the Middle East, it added.

The plantations and palm oil mills division accounted for $112m in revenues, up 46% from last year, largely on the back of higher selling prices of palm oil and partly due to an increase in the company’s palm oil production volumes by 12%.

Overall, lower palm oil stocks levels and increased offtakes by the biodiesel industry have firmed up palm oil prices in Asia, the company said.

July palm oil futures were trading at Malaysian ringgit (M$) 2,370-2,380/tonne ($699-702) -- a 20% jump since March 2007. Palm oil futures have seen a relentless increase since this year amid strong demand from the food and the biofuel sector.

Wilmar operates a 350,000 tonne/year biodiesel plant in Indonesia, which started in the first quarter of 2007.

Two more plants of 350,000 tonnes/year each are expected to start in the second and third quarters this year.

Meanwhile, Wilmar would continue to build on the merged entity’s palm merchandising and processing capabilities to tap on the rapid growth in palm oil production in Indonesia and Malaysia, Kuok said.

“Upon completion of these corporate exercises, Wilmar will have a significant presence in key Asian consuming countries like China and India in processed agricultural commodities…We will focus our efforts on these opportunities,” he added.

Wilmar’s Tuesday share price was unchanged at Singapore dollar (S$) 3.02 ($2) at noon on the Singapore exchange.

 

($1 = M$3.39/S$1.52)

By: Anu Agarwal
+65 6780 4359

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