Singapore's Wilmar quarter four net profit halves on provision for sugar assets

A worker checks a container with palm oil fruits collected at a plantation in Chisec, Guatemala December 19, 2018. - Reuters

SINGAPORE: Singapore-listed commodity trader Wilmar International Ltd posted on Thursday a more than 50 percent fall in fourth-quarter net profit from a year earlier, mainly due to a provision linked to sugar milling assets in Australia.

The company, which has U.S. agricultural trader Archer Daniels Midland Co among its biggest shareholders, said net profit fell to $200.9 million in the three months ended on Dec. 31, from $426.7 million in the same quarter of 2017.

The company said it decided to make provision for a $138.6 million impairment on its goodwill and sugar milling assets in Australia, citing ongoing depressed sugar prices.

Raw and white sugar futures on ICE also finished 2018 at their lowest levels since 2008, as a global supply glut led to a second consecutive annual decline.

Wilmar's core net profit, which excludes non-operating items, dropped to $334.7 million from $373 million a year earlier. It said the decrease was due to the African swine fever outbreak in China, along with weaker commodity prices.

Its tropical oils segment saw a 30 percent increase in fourth-quarter pretax profit, while the oilseeds and grains segment fell 44 percent compared with the previous year.

Wilmar swung to a pre-tax loss of $114.1 million in its sugar business.

Wilmar's annual net profit fell nearly 6 percent to $1.13 billion, versus analysts' average estimate of $1.2 billion, according to Refinitiv data. Its annual core net profit rose more than 27 percent to $1.30 billion.

The company said it was "reasonably optimistic" that performance for 2019 will be satisfactory.

"With the recent recovery of crude palm oil prices and satisfactory margins in downstream processing, tropical oils should continue to do well in 2019," Kuok Khoon Hong, chairman and CEO, said in a statement.

"Crush margins for 1Q2019 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 soybean basis, but this is expected to improve in 2Q2019," Kuok said.

Wilmar recently converted its China holding company into a joint-stock company as part of its previously disclosed plan for a possible separate listing in China, he said. - Reuters