SINGAPORE: Wilmar International, the world's largest palm oil plantation firm by market value, reported a 28 per cent decline in quarterly earnings on losses from it oilseeds and grains units, missing forecasts and knocking its shares down 5 per cent.
Wilmar, which earns more than half of its revenue from China, said it is optimistic about the outlook for 2011, with commodity prices expected to remain firm. Still, analysts say the company faces huge pressure on its margins from rising food prices that have pushed up its feed stock costs, while price caps in China are preventing it from passing on increases to customers.
Wilmar shares fell as much as 5 percent to S$5.14 (S$1 = RM2.39), its lowest since mid-2009. Shares of Wilmar were 4.4 per cent lower at S$5.17 at 0730 GMT. They have lost about 8 per cent since the start of the year.
"The numbers are significantly below consensus and our forecasts. The sole factor to that is two consecutive quarterly losses in their oilseeds and grains division," said a Singapore-based analyst, who declined to be identified because he is not authorised to speak to the media.
"The way the company blamed this on weak margins and inopportune buying is kind of a euphemism for 'we got it wrong'."
Wilmar's palm oil plantations in Indonesia and Malaysia supply less than 10 per cent of the demand of its refineries, while logistical and regulatory challenges prevent the company from expanding plantation area.
Wilmar, which has a market value of US$27 billion (US$1 = RM3.05), booked an October-December net profit of US$318.6 million, down from US$442 million a year ago, missing analysts' forecasts of US$378 million.
The company's oilseeds and grains business reported a pre-tax loss of US$173.2 million in the fourth quarter, despite a 15.9 per cent increase in revenue to US$3 billion, and 4.2 per cent increase in volume.
Wilmar said in the statement that the performance of the oilseeds and grains business reflected "very poor crush margins from excessive imports of beans by the industry and the group's less timely purchases of raw materials."
Its consumer products division registered a 33.4 per cent decline in the fourth quarter to US$37.5 million, also on weaker margins due to rising prices of edible oils feedstock, despite a 29.3 per cent rise in revenue.
"The key disappointment came from the larger losses in soyabean crushing despite earlier management guidance that the third quarter would be the worst quarter for this division," brokerage house UOB Kay Hian said in a note to clients.
Wilmar's chairman and chief executive Kuok Khoon Hong said in a statement that the group was optimistic about 2011 despite the weaker performance. - Reuters
Read more: Wilmar results miss forecasts http://www.btimes.com.my/Current_News/BTIMES/articles/wilmo/Article/#ixzz1ErrABh95
Wilmar, which earns more than half of its revenue from China, said it is optimistic about the outlook for 2011, with commodity prices expected to remain firm. Still, analysts say the company faces huge pressure on its margins from rising food prices that have pushed up its feed stock costs, while price caps in China are preventing it from passing on increases to customers.
Wilmar shares fell as much as 5 percent to S$5.14 (S$1 = RM2.39), its lowest since mid-2009. Shares of Wilmar were 4.4 per cent lower at S$5.17 at 0730 GMT. They have lost about 8 per cent since the start of the year.
"The numbers are significantly below consensus and our forecasts. The sole factor to that is two consecutive quarterly losses in their oilseeds and grains division," said a Singapore-based analyst, who declined to be identified because he is not authorised to speak to the media.
"The way the company blamed this on weak margins and inopportune buying is kind of a euphemism for 'we got it wrong'."
Wilmar's palm oil plantations in Indonesia and Malaysia supply less than 10 per cent of the demand of its refineries, while logistical and regulatory challenges prevent the company from expanding plantation area.
Wilmar, which has a market value of US$27 billion (US$1 = RM3.05), booked an October-December net profit of US$318.6 million, down from US$442 million a year ago, missing analysts' forecasts of US$378 million.
The company's oilseeds and grains business reported a pre-tax loss of US$173.2 million in the fourth quarter, despite a 15.9 per cent increase in revenue to US$3 billion, and 4.2 per cent increase in volume.
Wilmar said in the statement that the performance of the oilseeds and grains business reflected "very poor crush margins from excessive imports of beans by the industry and the group's less timely purchases of raw materials."
Its consumer products division registered a 33.4 per cent decline in the fourth quarter to US$37.5 million, also on weaker margins due to rising prices of edible oils feedstock, despite a 29.3 per cent rise in revenue.
"The key disappointment came from the larger losses in soyabean crushing despite earlier management guidance that the third quarter would be the worst quarter for this division," brokerage house UOB Kay Hian said in a note to clients.
Wilmar's chairman and chief executive Kuok Khoon Hong said in a statement that the group was optimistic about 2011 despite the weaker performance. - Reuters
Read more: Wilmar results miss forecasts http://www.btimes.com.my/Current_News/BTIMES/articles/wilmo/Article/#ixzz1ErrABh95
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