Wilmar International - OCBC Investment 2023-08-15: Results Missed But Could See A Better 2H23

• Wilmar (SGX:F34)’s 1H23 PATMI and core PATMI (excluding non-operating items and changes in fair value of biological assets) fell 52.7% and 50.0% y-o-y to US$550.9m and US$577.2m respectively.
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• An interim dividend of S$0.06 per share was declared, same as last year.

Segmental performances were weighed down by weak margins

• For Food Products, pre-tax profit (PBT) decreased by 84% y-o-y to US$82.7m in 1H23, largely due to unfavourable sales mix, lower sales volume from consumer products (as more people resumed dining out and weaker consumer demand in China), together with weaker margins from 3.3% in 1H22 to 0.6% in 1H23, as a result of high feedstock costs for the flour business.
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• Feed and Industrial Products’ PBT fell 21% y-o-y to US$399m in 1H23, due to lower margins for the mid and downstream tropical oils operation. It was further dragged by weak crush margin as a result of lower demand from the poultry and hog industries and elevated soybean prices in 2Q23. These were partially offset by stronger sugar merchandising and shipping operations.
• Separately, Plantation and Sugar Milling business’ PBT was down 86% y-o-y to US$62.9m with weaker performance across palm plantation and sugar milling operations due to lower palm oil prices, lower fresh fruit bunched production and weaker volume of sugar sales in 1H23.

Looking for a better 2H23

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OCBC Research Team OCBC Investment Research | https://www.iocbc.com/ 2023-08-15 SGinvestors.io

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