Published February 28, 2009

Wilmar profit up by more than half for Q4

Results helped by tax writeback from overprovision for previous quarters

By CHEW XIANG

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PALM oil giant Wilmar International yesterday announced strong annual results, including a 59.7 per cent jump in fourth- quarter net profit to US$373.6 million.

MR KUOK Optimistic about the next two quarters

But chairman and chief executive Kuok Khoon Hong said profit this year 'may not be better than last year', according to Bloomberg.

However, 'for the next two quarters, I'm quite optimistic that we'll be OK', he told reporters.

For the fourth quarter, sales fell 10.4 per cent to US$5.83 billion, from US$6.5 billion a year ago, on the back of falling commodities prices as volume grew 4 per cent. The Q4 results were also helped by a tax writeback from overprovision in previous quarters. This resulted in income tax expense showing an inflow of US$11.4 million against an outflow of US$78.7 million the previous Q4.

Earnings per share rose to 5.85 US cents, from 3.66 US cents.

Despite falling prices for palm oil, the group did not book any revaluations of its biological assets, Mr Kuok said, as it has traditionally been 'very conservative' in revaluations.

For the full year, sales rose 77 per cent to US$29.1 billion, with net profit of US$1.51 billion, up 164 per cent.

Full-year earnings per share was 23.98 US cents, almost double the 12.8 US cents achieved in 2007. Net asset value rose to US$1.5044, from US$1.2286 a year ago.

Relatedlinks: Click here for Wilmar's news release Financial statements

Mr Kuok said the company's strong balance sheet and cash position meant that it could repay short-term loans and replace them with long-term borrowing.

The company held over US$1.1 billion in cash, and Mr Kuok said a substantial war-chest was available for investment or mergers and acquisition activity. 'This year, we expect to spend at least US$850 million (on capex),' he said.

'This investment in our plants and machinery is what gives us our competitive advantage,' he said, adding that the company could also buy more bulk carriers to ship its products.

Before-tax profit in Q4 was mixed across its business segments. Palm and laurics saw a 54 per cent jump to US$156 million but consumer products, plantations and palm oil mills as well as oilseeds and grains saw declines of at least some 30 per cent year-on-year.

Profits from plantations were hit by the lack of fair value gain of biological assets recorded in Q4 2007. However, Wilmar did record a US$13.3 million gain from changes in fair value of the derivative portion of a US$600 million convertible bond it issued in 2007.

Wilmar has proposed a final dividend of 4.5 Singapore cents, raising the year's total to 7.3 Singapore cents a share, almost triple its payout in 2007.

The stock closed 16 cents higher at S$2.88. This was a rise of 5.9 per cent compared to a 1.4 per cent fall in the benchmark Straits Times Index, of which Wilmar is a component stock.