Wilmar's Q2 profit falls 22% on lower margins, losses from associates

Bottles of Wilmar International Ltd. Arawana brand cooking oil sit on a shelf at a supermarket in Shanghai, China, on Friday, Aug 14, 2009. Commodities player Wilmar International has reported a 22 per cent drop in its second quarter net profit
Bottles of Wilmar International Ltd. Arawana brand cooking oil sit on a shelf at a supermarket in Shanghai, China, on Friday, Aug 14, 2009. Commodities player Wilmar International has reported a 22 per cent drop in its second quarter net profit to US$170.7 million (S$213 million). -- PHOTO: BLOOMBERG

SINGAPORE - Commodities player Wilmar International has reported a 22 per cent drop in its second quarter net profit to US$170.7 million (S$213 million).

Net profit fell despite revenue creeping up 0.9 per cent to US$10.5 billion for the three months to June 30.

The company said on Thursday the lower net profit was mainly due to margin contraction in its palm business segment as well as losses from its associates.

The palm and laurics business recorded a 4 per cent decline in sales volume to six million metric tonnes in the quarter.

Its associates recorded a pre-tax loss of US$4 million compared with a pre-tax profit of US$24.9 million mainly due to lower contributions from its associates in China.

Net profit for the half year plunged 38 per cent to US$332.5 million, while revenue saw a 0.8 per cent uptick to US$20.6 billion.

Earnings per share is 2.7 US cents in the second quarter, down from 3.4 US cents in the same period a year ago.

Net asset value per share is US$2.371 at the end of June, up from US$2.345 at the end of December.

Wilmar chief executive Kuok Khoon Hong said in a statement that things should improve in the near term.

"Lower prices due to improved global oilseed supplies, less excessive imports of beans into China and higher seasonal demand in the second half of the year should further improve crush margins in the coming months.

"Consumer products, with its wide product portfolio, should continue to grow across all our markets."

The company's board has proposed an interim dividend of two cents per share.

Wilmar shares closed unchanged at $3.24 on Thursday. It reported its earnings after markets closed.