Wilmar warns of losses in 2nd quarter

A sugar cane plantation worker. Wilmar yesterday said it expects losses for the sugar unit to to be greater than last year, partly because of the delay in harvesting due to rain.
A sugar cane plantation worker. Wilmar yesterday said it expects losses for the sugar unit to to be greater than last year, partly because of the delay in harvesting due to rain.PHOTO: REUTERS

Agri-business group Wilmar International yesterday said it expects to report net losses of about US$230 million (S$310 million) for the second quarter ended June 30, dragged down by lower takings in the oilseeds and grains manufacturing business, and the sugar segment.

"Untimely purchases of raw materials, specifically soybeans, in a highly volatile and disruptive market, resulted in significant losses being recorded in the oilseeds and grains segment," the group said.

"Unexpected flooding in Argentina affected the soybean harvest, and heavy participation by funds in the futures markets, among other factors, contributed to the very volatile markets."

Wilmar also expects losses for the sugar unit to to be greater than last year, because of the delay in harvesting due to rain and accounting mark-to-market losses on hedges as a result of higher sugar prices.

Dry weather in Australia in the early part of the year will also reduce the volume of cane crushed this year, the group said.

Meanwhile, Wilmar said its tropical oils segment and consumer products sub-segment continued to perform "satisfactorily".

Last year, Wilmar posted a second-quarter net profit of US$201.8 million. Wilmar still expects to be profitable for the six months ended June 30, although it expects profit to be "significantly lower" than in the same period last year.

The group added that it expects the operating environment to normalise in the remainder of the year. The statement came after market close. The counter ended unchanged at $3.35.

A version of this article appeared in the print edition of The Straits Times on July 20, 2016, with the headline 'Wilmar warns of losses in 2nd quarter'. Print Edition | Subscribe