Singapore’s Wilmar third-quarter profit slumps as lower palm oil prices hurt

Palm oil prices fell globally, hurt by rising inventories and an increase in demand for other oils such as vegetable oil.

Wilmar, one of the world’s largest food producers, said core net profit for the three months ended Sept. 30 was $323.6 million, compared with $796.7 million a year ago.

The company, however, said operating conditions improved in one of its biggest markets, China, during the quarter and is expected to remain favourable for the remainder of 2023.

“We believe results for the rest of the year will be satisfactory,” Wilmar said.

Tropical oil refining margins will continue to normalise, the company said, post “exceptional” conditions in 2022.

Surging energy and materials prices in the wake of Russia’s invasion of Ukraine last year stoked fears of stagflation, a combination of persistent inflation and stagnant growth, which sent tropical oil prices to historic highs during the first half of 2022.

Tropical oil prices have been under pressure since the second half of 2022 and into 2023, reflecting subdued demand from top importers China and India.

The agribusiness recorded volume growth across operations during the quarter.

Sales volume of the feed and industrial products segment — the biggest profit generator — was 16.6 million tonnes, up 12.8%.

Overall volume of food products segment rose 7.9% during the quarter.

The company said its sugar milling and merchandising operations showed resilient performance but was not enough to tackle the earnings cramp from the oil business.

“Sugar merchandising, milling and refining will remain good with higher sugar prices,” it said.

Consumer products business improved due to better margins and higher sales volume, Wilmar added.

(Reporting by Poonam Behura and Echha Jain in Bengaluru; Editing by Shilpi Majumdar)