SINGAPORE-BASED agricultural marketing giant, Wilmar, has blamed the new sugar marketing program, for which it controversially fought growers, for a lower profit in the September quarter.
Wilmar’s profit dropped 5.7 per cent, disappointing its second biggest shareholder, the US ag trader Archer Daniels Midland (ADM) which described the result as ‘lower than anticipated’.
ADM is looking to reduce its exposure to sugar in Brazil, but has been quietly increasing its share of Wilmar (the biggest shareholders being the Kuok brothers) mainly for its oil seed crushing business, which is big in China.
That sector of Wilmar increased profit by 2.3 per cent on revenue, which increased 16.8 per cent to $5.54 billion. That means reduced margins, an issue in all Wilmar divisions which is worrying investors — it is getting bigger through reduced margins.
The Australian sugar business had a 13.05 per cent drop in profit to $75.2 million ‘due to timing effects from the new Australian pricing program.
That’s the program that Wilmar fought for so hard, taking on growers and employing an army of lobbyists in Canberra and Brisbane.
Wilmar also suffered in its biofuels projects in Indonesia based on its extensive palm oil plantations.
Chairman and CEO Kuok Khoon Hang described the profit as ‘satisfactory’.