Wilmar First-Quarter Profit Drops 49% on China Soybean Crushing

Wilmar International Ltd. (WIL), the world’s largest palm oil trader, said first-quarter profit fell 49 percent as seasonal losses at its sugar unit were compounded by “very poor” margins in soybean crushing and palm refining.

Net income was $161.8 million in the three months ended March 31, from $315.4 million a year earlier, the Singapore-based company said in a statement. Sales rose 0.7 percent to $10.3 billion.

“Whilst current crushing conditions in China are tough, we believe that such conditions are not sustainable long term,” Wilmar Chief Executive Officer Kuok Khoon Hong said in the statement. The margins in soybean crushing are forcing the refiners into mergers and that “will ultimately benefit us.”

Wilmar is expanding into sugar and packaged foods to diversify from palm oil, an industry beset by environmental scrutiny in recent years. Together with First Pacific Co., Wilmar last month bid A$1.3 billion ($1.2 billion) for Goodman Fielder (GFF) Ltd., the biggest baker in Australia and New Zealand, to secure food brands that could be marketed in China.

The stock advanced 1.2 percent to S$3.34 at the close in Singapore. The announcement came after market.

The result compares with a range of $298 million to $321 million estimated by DBS Vickers Securities Pte and a $200 million to $220 million range estimate from UOB Kay Hian Holdings Ltd.

Wilmar’s pretax loss from its sugar unit was $54 million, wider than the $13.6 million loss a year earlier. The oilseeds and grains unit had a pretax loss of $57.4 million compared with a $47.2 million pretax profit a year earlier.

The company agreed this year to form a Myanmar sugar venture and took joint control of India’s largest refiner of the sweetener, Shree Renuka Sugars (SHRS) Ltd., in a $200 million deal.

To contact the reporter on this story: Yuriy Humber in Tokyo at yhumber@bloomberg.net

To contact the editors responsible for this story: Jason Rogers at jrogers73@bloomberg.net Madelene Pearson, Abhay Singh

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