Low says management expect its margins to be impacted by lower global soybean crushing margins due to a decline in soymeal demand in China as the country reduces the percentage of it in animal feed.
But if that happens, Wilmar says its underutilised soybean processing plants can be used to process rapeseeds which is an alternative for soybean in animal feed. China may also choose to release some of its soybean stocks next year on the back of higher tariffs on US soybean imports.
Nevertheless, management expects most of its operations to continue to do well in the coming quarter.
To recap, Wilmar reported a solid set of 3Q18 results. Revenue fell 4.3% y-o-y to US$11.6 billion ($15.9 billion) and a 10.7% rise in earnings to US$407.4 million in 3Q18, bringing 9M18 earnings to US$927.1 million or 82% of OCBC’s full-year estimate.
Year to date, shares in Wilmar are up 3.5% to $3.25.
