Leading Asian agribusiness giant Wilmar International has reported a 5.7% fall in net profit for the 2018 fiscal year, ending 31 December 2018, to US$1.128bn 2018, impacted by a tough operating environment.
“The group performed well in 2018 even though we were affected by low palm oil and sugar prices in our upstream operations and a volatile soyabean market created by US-China trade tensions,” said Wilmar chairman and CEO Kuok Khoon Hong.
The tropical oils business segment reported a 37% increase in pre-tax profit to US$546.1M, driven by better performance in the manufacturing and merchandising businesses.
“Lower commodity prices benefited our downstream businesses through lower feedstock costs. However, this improvement was partially offset by weaker contributions from the plantation business due to lower palm oil prices.”
Oil palm production yield for 2018 improved by 10% to 21.6 tonnes/ha compared with 2017 because of favourable weather conditions.Sales volume increased 5% to 24.3M tonnes in 2018 compared with the previous year, driven by consistent strong demand for biodiesel and downstream products.
Wilmar’s oilseeds and grains segment recorded a 20% jump in pre-tax profit to US$875M but fourth-quarter profit fell to US$115.2M from US$206.4M in the same quarter in 2017, due to weaker crush margins.
“Crush margins for (the first quarter of fiscal 2019) will be adversely impacted by the sharp decline in meal demand from the outbreak of African swine fever in China and the sharp drop in Brazilian soyabean basis, but this is expected to improve in (the second quarter of fiscal 2019),” Hong said.
Wilmar’s business activities include oil palm cultivation, oilseed crushing, edible oil refining, sugar milling and refining, and the manufacturing of consumer products, speciality fats, oleochemicals, biodiesel and fertilisers.