Wilmar International - UOB Kay Hian 2024-11-01: 3Q24 Results Below Expectations

• Wilmar’s 3Q24 results trended way below our and market expectations. Revenue grew both q-o-q and y-o-y on higher sales volume across all segments, except for tropical oils. However, profits fell q-o-q due to compressed margins across most business segments.

Below expectations

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3Q24 earnings declined q-o-q.

• Revenue rose 16% q-o-q and 0.4% y-o-y due to strong sales volume across both the feed & industrial products (+17% q-o-q) and food products (+17% q-o-q). However, margins were weak across most business segments, leading to lower EBITDA margin and earnings.
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• Furthermore, the sugar mills in Australia periodically halted operations due to the workers’ strike. As this lasted from June to mid-September, the sugar crushing season was negatively impacted.

Key highlights from Wilmar’s 3Q24 results:

1. Tropical oils and fertiliser segments saw better-than-expected results. This was mainly due to improved refining margins from the tropical oils business (within our expectation) and better performance from the fertiliser operations due to the rise in fertiliser prices.
2. Soybean crushing margins were better than expected, led by a slight uptick in soybean meal demand in China.
3. Sugar divisions. The milling segment was underwhelming due to the larger-than-expected negative impact from the workers’ strike. The merchandising segment likely performed better on higher sugar prices and white sugar premium.
4. Consumer products business fell y-o-y, as the higher sales volume was offset by lower prices amid sustained stiff competition.

Snapshot of YKA’s results.

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Heidi Mo UOB Kay Hian Research | Llelleythan Tan Yi Rong UOB Kay Hian Research | https://research.uobkayhian.com/ 2024-11-01 SGinvestors.io

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