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Wilmar International Limited: 3 Things Investors Should Know About Its Latest 2017 Second Quarter Earnings

Wilmar International Limited (SGX: F34) is a leading agribusiness group in Asia. It operates through three main segments: Tropical Oils; Oilseeds and Grains; and Sugar.

Two weeks ago, the company reported its 2017 second quarter earnings. Let’s look at three useful pieces of information investors may want to know from the announcement:

1. The overall result

The table below shows some of the important numbers from Wilmar’s income statement for the second quarters of 2017 and 2016:


Source: Wilmar International 2017 second quarter earnings release

The company managed to turnaround its operations in the second quarter of 2017 given the higher revenue and the presence of a positive profit. Wilmar said that ”the improvement was driven by recovery in Oilseeds & Grains from the one-off losses in 2Q2016, but was partially offset by weaker performances in Tropical Oils and Sugar.”

2. Segmental performance

The table below shows the year-on-year changes in profit before tax for each of Wilmar’s business segments in the second quarter of 2017:


Source: Wilmar International 2017 second quarter earnings presentation

We can see that the Oilseeds and Grains segment had a positive performance. It experienced “higher crush volume and positive crush margins.”

On the other hand, the Tropical Oils segment saw a significant reduction in operating profit “due to the challenging operating conditions faced by the merchandising and processing businesses.” There was an improvement in production volume at the segment, but it was offset by the headwinds.

Similarly, the Sugar division experienced a weaker performance “due to seasonal losses from plant maintenance activities by the Milling business in the first half of the year and weaker performance in the merchandising and refining businesses.”

3. What lies ahead

As investors, we rely on many tools, including management’s forecasts, to help us gain insight on what to expect for the near- to long-term performance of our investments’ businesses.

With regard to Wilmar, this is what the company said about its future in its earnings release:

“We expect Tropical Oils to perform better in 2H2017 on the back of improvements in production yields and better margins from downstream operations. Oilseeds crush margins are expected to remain positive for the rest of the year and Consumer Products will improve as it enters its seasonal peak period. However, Sugar will continue to be affected by the volatility in sugar prices.

While the Group may face short term challenges, we remain very optimistic about the tremendous growth prospects of our various businesses and will continue with our expansion plans especially in China, India and Indonesia.”

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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 Lawrence Nga doesn’t own shares in any companies mentioned.