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Wilmar International Has Nothing To Celebrate For The First Quarter

Wilmar_logoWilmar International (SGX: F34) can be considered a major player in the palm and laurics, and the oilseeds and grains sectors. Being a major player doesn’t necessarily shield the company from the wrath of market forces. Wilmar International announced its first quarter earnings on 8th May 2014.

Operating Result

The first thing that pops up from the earnings report is that revenue hardly improved year on year. It ended at USD 10.27billion, roughly the same level as last year. The next noticeable thing is its huge drop in its net profit, ending the quarter at USD 163million, a more than 50% reduction from last year. Similarly, its earnings per share dropped to 2.5 US Cents per share, down 49% year on year.

Wilmar’s palm and laurics business ended with an operating profit of USD 162million, which is 26% lower than last year. This was due to a much lower refining margin for its crude palm oil. Its oilseeds & grains business faces even greater challenges and fell into losses this quarter. The current margin in China is negative due to an over-supply and weakening demand environment. The segment produced an operating loss of USD 57.4million.

On a brighter note, Wilmar’s consumer products and plantation and palm oil mills businesses continue to register good profit and growth. The balance sheet of Wilmar International is kept relatively stable from the last quarter with a net debt to capital ratio of 45% and a net debt to equity of 83%.

Wilmar ended the trading day at S$ 3.34, which is at a Price to Book ratio of 14.7 times and 1.13 times of Price to Book ratio.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim owns Wilmar International.