Wilmar

Wilmar: Strong 3Q12 results ahead of estimates, with rev at $12.3b, -5.7% yoy and +11.8% qoq, while core net profit at $388m, -14% yoy and +125.6% qoq. Note however that strong performance was partly due to ‘more speculative’ favorable trading positions which grp undertook in their Soybean divisions during the qtr. Key highlights were: - Margin Improvement for Palm & Laurics and Consumer Products - US$60.3 million profit in Oilseeds & Grains, reversing 2 qtrs of losses - Positive Contribution from Sugar - Remains positive on long term prospects Most key segments reported higher profits during the quarter with the exception of Oilseeds & Grains and Plantations & Palm Oil Mills. Despite the lower profit in Oilseeds & Grains vs 3Q11, the segment recorded its first qtrly profit for the yr, reducing the losses in the 1H12. Merchandising & Processing segment – During the qtr, Palm & Laurics sales vo increased marginally to 5.8m MT, while pretax profit, +6% yoy to US$181.2m due to improved margins, as the revised Indonesian export duty structure for palm oil products that came into effect in mid- Sept11 which favoured domestic refiners. Oilseeds & Grains saw a -7%yoy in sales vol to 5.2mMT on back of a difficult operating environment for oilseeds partially offset by growth in flour and rice. The business managed a turnaround from losses in previous qtes despite poor industry crush margins in China, mainly due to improved crush margins and timely purchase of raw materials. Consumer Products segment, - Posted a 4% increase in sales vol to 1.3m MT on the back of stronger demand for edible oils, flour and rice. Margins improved vs 3Q11 due to lower feedstock cost and as price increase restriction was in effect for the first seven mths of 2011. As a result, pretax profit surged to US$48.4m during the qtr vs US$14.4m yoy. Plantations & Palm Oil Mills Segment, - Pretax profit, -11% yoy to US$116.6m due to higher unit production cost and lower production yield and selling prices. Production yield was down 6% to 4.9 MT per ha as a result of low crop trend in Sarawak and also the after-effects of dry weather in Sabah, Kalimantan and Sumatra. Sugar business Segment, - As the sugar crushing season went into full swing in 3Q12, Sugar reported profits as expected for the qtr. Pretax profit was 77% yoy higher at US$101.3m, when results were affected by higher non-operating expenses. Associates saw an increase of 18% to US$48.5m due to higher contribution by associates in Africa. The improved performances by associates in Russia and India also contributed positively to 3Q2012 results Going forward, grp note that of a satisfactory result in spite of difficult market conditions especially in Oilseeds and Grains. Despite the uncertainties in the global economy, remains positive on its long term prospects due to good economic growth in its main markets of China, India and Indonesia, continued increase in the production of palm oil in Indonesia, coupled with new projects developed in the past few years like oleochemicals, rice and flour milling.