Wilmar: Tough conditions may continue

PETALING JAYA: Wilmar International Ltd has cautioned that tough operating conditions may continue to persist into the financial year 2024 (FY24).

For FY23, TA Research said Wilmar’s results came in above expectations.

The group’s core net profit fell 35.3% year-on-year (y-o-y) to US$1.6bil, excluding exceptional items, accounting for 112% and 119% of TA Research and consensus full-year estimates.

On a whole, all key business segments registered weaker performance in FY23.

“For the food products segment, FY23 pre-tax profit plunged 59.6% y-o-y to US$294.9mil.

“This was dragged by weaker margins as a result of high feedstock cost for the flour business during the first half and absence of a gain on dilution of interest in Adani Wilmar Ltd amounting to US$175.6mil, recognised in the previous year.

“Excluding the gain, this segment would have reported a drop of 46.8% y-o-y. Overall sales volume increased by 5.6% y-o-y to 30.7 million tonnes,” the research house said in a report.

Moreover, the FY23 pre-tax profit for Wilmar’s feed and industrial products division fell 40.6% y-o-y to US$926.7mil despite higher sales volume.

This is mainly due to weaker margins for its mid and downstream operations from the tropical oils business.

“The FY23 pre-tax profit for the group’s plantation and sugar milling segment decreased by 12.1% y-o-y to US$500.1mil, mainly due to lower profit from the palm plantation business as a result of lower palm oil prices.

“Fresh fruit bunch production remained flattish at 4.5 million tonnes, reflecting a 0.4% increase y-o-y,” TA research said.

Additionally, contributions from joint ventures and associates rose by 16.8% to US$319.8mil, supported by higher contributions from investments in Europe.

Wilmar has proposed a final tax-exempt dividend of S$0.110 per share. This brings the total dividend to S$0.170 per share for FY23, similar to FY22.

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