Wilmar (SGX:F34)’s 1Q26 results missed expectations, despite strong top-line growth. Its revenue rose 21.9% y-o-y to US$19.8b in 1Q26, driven by higher sales volume (+15.6% y-o-y) across all its core segments and the consolidation of AWL Agri Business Limited (AWL).
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1Q26 results missed expectations; unrealised hedging losses expected to reverse.
However, Wilmar’s net profit and core net profit fell 22.8% and 23.0% y-o-y to US$265.6m and US$264.2m respectively. The earnings decline was largely due to temporary unrealised mark-to-market hedging losses of ~US$50m, stemming from sharp commodity price movements amid Middle East tension, as well as weaker contributions from associates and joint ventures.
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Higher crude palm oil (CPO) prices: near-term support for upstream, mixed implications for downstream.
Escalation Middle East tensions have lifted crude oil prices, boosting biodiesel economics and providing a tailwind to CPO prices. Elevated CPO prices are supportive of Wilmar’s upstream earnings in the near term. However, they present a double‑edged sword for downstream operations, as higher input costs could weigh on margins—particularly where cost pass‑through to consumers is constrained by the competitive and staple‑food nature of the business.
Moreover, adjustments to selling prices typically occur with a time lag, which could weigh on near-term margins.
Downgrade to HOLD.
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Above is an excerpt from a report by OCBC Group Research. Clients of OCBC Securities may be the first to access the full PDF report @ https://www.iocbc.com/.
