Wilmar Shares Fall 4.9% as Core Profit Drops and Plantation Fire Inquiry Continues

Wilmar International’s market pressure reflects two concerns arriving together: lower underlying earnings and questions about fires on plantation land in Indonesia. Its shares fell 4.9 per cent on Thursday to S$3.11, extending a decline of more than 20 per cent over six months. The company said it expects no material operational or financial effect from the fires, but that assessment now sits alongside an ongoing inquiry and weaker margins.

Share decline meets weaker underlying profit

The shares first touched S$3.12 at 10.47 am, down 4.6 per cent, or S$0.15, from Wednesday’s S$3.27 close. They recovered slightly to S$3.14 by the midday break, then eased again to finish at S$3.11, a fall of S$0.16. The stock was at S$3.99 on Apr 8 and is now at its lowest level in more than 10 months.

Those price moves give investors a clear measure of the deterioration, while the earnings figures help explain the business pressure. For the quarter ended Sep 30, Wilmar reported net profit of US$281 million, returning to profit after a year-ago loss that had included a one-off compensation expense paid to the Indonesian government. Core net profit, which better reflects the quarter’s underlying performance, fell 25.2 per cent year on year to US$267.3 million.

Wilmar attributed the weaker result partly to higher raw material costs and lower soybean crushing margins. Those factors squeeze the spread between input costs and the value recovered from processing soybeans. The company’s figures show that the return to a headline profit did not mean its core earnings had recovered: the one-off charge in the prior-year comparison shaped the headline change, while the underlying measure declined.

What the company says about the fires

Wilmar disclosed that Indonesian police were conducting preliminary investigations into fires affecting about 28 hectares of plantation land belonging to its subsidiaries in West Kalimantan. The company said it was cooperating. Its internal review found that the fires began either beyond its concession boundaries or in areas that were not planted, including land farmed by local communities and conservation areas under its management.

The group said it found no evidence connecting the fires to its land preparation or clearing work. It estimated losses involving crops and oil palms at less than US$500,000. Wilmar also said the fires and haze had not caused, and were not expected to cause, a material operational, financial, legal or regulatory impact.

That is the company’s current assessment; the inquiry is still preliminary. The area affected and the estimated crop losses provide some scale, while the investigation’s findings could clarify how the fires started and whether any further effects emerge. For now, the reported amount of crop and palm loss is small relative to the broader business, but the company’s view of financial impact does not settle the questions being examined.

More disclosures sought from plantation groups

The disclosures followed a second round of questions from Singapore Exchange Regulation to listed agribusinesses operating in Indonesia. The exchange sought more detail about companies’ exposure to fires and haze affecting Singapore, including whether authorities in Singapore, Indonesia or elsewhere were investigating them. It also asked about links to 10 Indonesian companies that had received preventive measure notices under Singapore’s Transboundary Haze Pollution Act.

Wilmar said it had no operational, supply-chain or business relationships with those 10 companies. That response addresses one part of the information requested; it is separate from the preliminary inquiry into fires affecting land linked to Wilmar’s subsidiaries.

For a business with plantation operations and supply chains, these questions can matter beyond the direct value of damaged crops. The company’s own account points to land managed by different parties and areas outside planted concessions, making the origin and location of fires central to assessing exposure. Further findings could sharpen that picture, while the reported financial estimate remains Wilmar’s present measure of loss.

What to watch in the next update

The near-term facts to follow are the outcome of the Indonesian inquiry, any change in Wilmar’s assessment of the fires’ effects, and whether the pressure on raw material costs and soybean crushing margins persists. The earnings data already show a split between headline net profit and core profit. The share decline adds market context, but it does not by itself explain how much weight investors place on each concern.

For shareholders, the immediate picture combines a 25.2 per cent year-on-year fall in core net profit with an unresolved inquiry and a company estimate of less than US$500,000 in crop and oil palm losses. Future disclosures will determine whether the fire-related exposure remains limited as Wilmar currently expects, while the next earnings figures will show whether input costs and crushing margins continue to constrain underlying performance.