Wilmar Q2 net profit falls 15% to $344.5m despite sales up 18%

13 August 2010 11:41  [Source: ICIS news]

SINGAPORE (ICIS)--Wilmar International Ltd's second-quarter net profit declined 15.4% year on year to $344.5m (€268.7m) as margins were lower and its convertible bonds had a negative change in valuation of $41.7m, the Singapore-listed crude palm oil (CPO) producer said on Friday.

Sales for the period jumped 18.3% to $6.76bn as a result of strong sales volumes and higher prices, with net profit excluding non-operating items growing 12.8% to $380.3m, the company said in a statement.

The company, which has palm plantations in Malaysia and Indonesia, said that its margins in the second quarter were “lower but satisfactory across most business segments”.

Wilmar's plantations and palm oil mills segment, however, saw a 24% year-on-year fall in pre-tax profit to $76.6m due to lower CPO prices and higher production costs in the June quarter, it said.

“Yield dropped 10% to 4.51 tonnes per hectare in the second quarter as a result of lower yield of newly matured hectarage and wet weather in most parts of Sumatra, which affected harvesting,” said the company.

For the first half of the year, Wilmar had a 5.2% decline in net profit to $745.9m even as sales surged 27% to $13.52bn, it said.

Net profit excluding non-operating items for the six-month period was up 8.8% at $772.1m, it said.

“The group is positive on the prospects of Asian economies, especially China, India and Indonesia, despite uncertainties in the global economic environment,” said Wilmar chairman and CEO Kuok Khoon Hong.

Wilmar said it was planning a major expansion into sugar to boost its long-term profitability, with the proposed acquisition of Sucrogen Ltd and the development of sugar production in Indonesia.

In a separate statement, the company said it is in discussions to take a minority stake in fellow CPO producer Kencana Agri Ltd of Indonesia.

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By: Pearl Bantillo
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