Weak commodity prices dent 2014 results

SINGAPORE -- Singapore' s  Wilmar International, a leading palm oil company, has reported a 12.3% year-on-year drop in full-year net profits to $1.16 billion after heavy margin drops in its palm and laurics business along and its oilseeds and grains business due to low commodity prices.

      Compared to 2013, total revenue fell by 2.3% to $43.1 billion last year as palm oil prices slipped. In addition to the drop in commodity prices led by crude oil last year, an oversupply of alternative oilseed types, such as sunflower, hurt overall revenue.

      Wilmar' s palm and laurics segment, which includes palm oil refining, suffered a 31.3% fall in profits before tax to $588 million with excess refining capacity in the industry.

      The plantation and palm oil mills segment, which includes more upstream operations, posted a 41.3% growth in profit before tax for the full year, but declined in the fourth quarter. Profits before tax increased by 11.2% year on year in the fourth quarter to around $77.2 million.

      Wilmar' s oilseeds and grains segment suffered the biggest drop in profits before tax with a 62.6% decrease from $231 million in 2013 to $86 million. Wilmar' s soybean processing operation in China weathered low margins due to weak demand and oversupply, eating into profits.

      The sugar segment experienced a slight year-on-year increase of 0.7% in revenue to $4.06 billion in 2014. While merchandising and processing grew 5.3% to $3.12 billion, this was not enough to offset the decrease in sugar milling, which fell 12.1% year on year to $938 million. Another factor in the profit dip was the cost of starting up operations in Myanmar.

      Chairman and Chief Executive Officer Kuok Khoon Hong sees some rays of hope.  " Our processing and downstream business should benefit from lower feedstock costs," he said, adding that Indonesia' s new biodiesel policy to support palm oil prices will benefit Wilmar in 2015.