May 8 (Bloomberg) -- Wilmar International Ltd., the world’s biggest palm oil processor, said first-quarter profit gained 23 percent as earnings at its oilseeds unit rebounded.
Net income was $315.4 million in the three months ended March 31, up from $255.9 million a year earlier, the Singapore-based company said today in a statement. That compares with the $296.5 million average estimate of three analysts surveyed by Bloomberg.
Wilmar’s oilseeds unit, which incurred a loss a year ago, improved due to higher margins in soybean processing, the company said. China will probably import less soybeans, used for oil and livestock feed, this year as the outbreak of bird flu curbs poultry demand, a Wilmar executive said last month.
“The positive crush margins during the quarter were a result of lower cost of imported soybeans and higher local product prices, due to late arrival of soybeans in China,” Wilmar said today in the statement.
Sales fell 2.6 percent to $10.2 billion due to lower palm oil and sugar prices.
Shares closed 2.1 percent higher at S$3.38 in Singapore, after earlier advancing as much as 4.2 percent. The benchmark Straits Times index gained 0.9 percent.
“In China, the bird flu will affect meal consumption in the short term, but is not expected to have a long term effect,” Chief Executive Officer Kuok Khoon Hong said in the statement. Feed is mostly made with soybean meal and corn.
The H7N9 virus has killed 26 people, as of May 2, since March and prompted Chinese authorities to shut down live poultry markets and cull birds. Soybean imports, which more than tripled from 2004 to 59.2 million metric tons in the year to Sept. 30, will probably fall to 58 million tons this year, according to a Bloomberg survey last month.
Soybean crushing margins might weaken in the next one to two months as the delayed shipments start arriving at the end of the month, Kuok said today at a briefing in Singapore. Logistical bottlenecks in Brazil, set to overtake the U.S. as the top soybean producer, hampered exports.
China’s demand for palm oil is also slowing, according to Kuok. “It is a surprise to us because palm oil is so cheap,” he said today at the briefing.
Palm oil imports to China in the six months through September may fall to 2.39 million tons, from 3.56 million tons in the first half, as inventories hold near record highs, according to China Cereals & Oils Business Net, the country’s biggest independent oilseed research.
Wilmar is focusing on increasing its palm plantation acreage in Africa and will continue to expand its sugar business, Kuok said today. The decline in commodity prices is creating acquisition opportunities, he said. The company said last month it bought a stake in Morocco’s sole sugar supplier for $263 million.
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