3Q11 results were mostly in line. Looking back at the Sep quarter results, soft commodity plays under our coverage generally did better, with most coming close to our expectations. For example, Golden Agri's (GAR) 3Q11 core earnings of US$116m was about 3% shy of our forecast; Global Palm's (GPR) 3M11 core net profit of IDR13.8b was almost spot on our estimate. While Wilmar's (WIL) 3M11 core earnings of US$437m was also in line, it suffered an exceptional loss of US$121m, mainly due to forex and investment losses. Olam's 1QFY12 earnings of US$34.2m met around 11% of our FY12 forecast; but its first quarter typically makes up just 10% of its full-year performance.

Noble surprised with net loss. Meanwhile, the biggest surprise came from Noble, which reported a net loss of US$17.5m - its first in 14 years. The group explained that its Agri business was hit by the extreme volatility in cotton prices since the start of 2011; its energy business was hit a severe mark-down in its carbon credits business. It also later announced the unexpected resignation of CEO Ricardo Leiman, further adding to the near- to medium-term uncertainty.

Margins look under pressure. In any case, even for those companies that performed within expectations, we note that there were increased signs of margin pressures, despite healthy volume growths. For example, WIL saw its gross margin easing further to 8.2% in 3Q11 from 9.3% in 2Q11, probably still somewhat hampered by its crushing business in China. Both GAR and GRP also saw gross margin declines of 4.4ppt and 8.6ppt, respectively.

Outlook remains mixed at best. Soft commodity players such as GAR, WIL and Olam continued to maintain pretty resilient outlook, citing the defensive nature of their consumer staple business. But we note that the hard commodity plays are generally more muted, especially for those dealing in industrial metals, as industrial demand/output typically slows during economic contraction. Certain agricultural commodities like rubber and cotton may also be adversely affected should people cut discretionary spending.