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Wilmar palm profits fall despite higher yields

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Wilmar International, the world's top palm oil processor, saw profits fall 16% in the last three months of 2015, as global demand weakened, missing analyst expectations.

Earnings from its palm oil business slumped, despite rising yields, amid a difficult macro-environment, but the group's soybean crushing business rose on increased volumes.

Net profits were down to $337.2m, from $401.2m in the same period in 2014.

Revenues over the three months to December 31 were down 12.5%, to $9.43bn.

Falling profits

Wilmar's full year profits of $1.06bn missed analyst forecasts of $1.16bn.

This was down 8.7% year-on-year, and an eight year low.

The drop in profits is being driven by lower results from the company's palm oil segment, as full-year profits were down 44% year-on-year.

Profits over the last three months of the year were down 62%.

Yields rise

"Plantations reported improved production yield," Wilmar said.

Yields were up 15% per hectare over the last three months of the year.

But this increase was more than offset by lower palm oil prices, with "a challenging macro environment with weak demand".

Palm oil prices have come under pressure from ample soyoil supplies, as well as the low price of energy.

In addition, Wilmar reported "compressed margins" in its downstream business.

Rising crush

But Wilmar's other segments have been performing better.

Pre-tax profits in the oilseeds and grains business, were up 40% in the last three months of the year, up 98% over the full year.

"The exceptional growth was driven by a record volume of soybean crushed supported by stable crushing margins," Wilmar said.

And profits in the sugar division were up 49% over the same period, thanks to higher sugar prices and sales volumes.

By Agrimoney.com

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