It blamed the operating difficulties in its Tropical Oils business and seasonal sugar losses.
Wilmar International's profits wilted in the first quarter of 2018 and fell 40.6% from US$341.98m last year to $203.28m. Revenue, however, jumped 5.7% from US$10.57b to US$11.17b.
According to its financial statement, the lower profit was mainly due to the difficult operating environment in Tropical Oils businesses and seasonal sugar losses experienced during the quarter. "Nevertheless, the Group continued to see strong growth in sales volume from our Oilseeds and Grains businesses, arising from higher crushed volume and the later Chinese Spring Festival in 2018," it said.
Revenue was higher thanks to the stronger sales volume of its Oilseeds and Grains businesses as well as higher commodity prices. Cost of sales jumped 6.5% to US$10.2b.
Meanwhile, the stronger performances by its Africa and India investments were dragged down by weaker contributions from its associates and joint venture companies in China and Vietnam. This resulted in an overall marginal decrease in the share of results of joint ventures & associates by 1.2% to US$41.5m.
Wilmar warned that the prospect of China imposing import tariffs on US soybeans will result in soybean prices staying volatile for the coming quarters. "Even though the performance of our Oilseed crushing business will not be affected in the short term, a prolonged standoff between China and the US would affect the utilization of our crushing plants," it said.
However, the company is still bullish about the prospects of its flour and rice businesses. "In addition, with the improvements in production yields and better margins from downstream operations, Tropical Oils segment will likely perform better in the subsequent quarters," it concluded.
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