Wilmar International Limited (WIL) reported its 4Q14 results last night, with revenue slipping 7.3% YoY (down 6.5% QoQ) to US$10777.7m, after weaker CPO prices resulted in lower Palm & Laurics revenue and Plantations revenue. But aided by lower feedstock cost and stable growth in its downstream business, net profit grew 8.7% YoY (-5.0% QoQ) to US$401.2m. Excluding exceptional items, core net profit jumped 16.9% YoY (-4.0% QoQ) to US$412.5m.

For the full year, revenue slipped 2.3% to US$43084.9m, or about 6.6% below our forecast, while net profit fell 12.3% to US$1156.2m; core earnings was down 6.4% to US$1219.9m, but was still 14.8% above our estimate. WIL declared a final dividend of S$0.055/share, unchanged from last year, bringing the total dividend of S$0.075; but below S$0.08 last year.

Going forward, WIL expects the lower palm, crude oil and sugar prices to negatively impact its plantation, palm bio-diesel and sugar milling segments, but believes its processing and downstream businesses should benefit from lower feedstock costs.

As a whole, WIL says its integrated business model should enable stable and resilient earnings in 2015. We will have more after the analyst briefing later. For now, we place our Buy rating and S$3.47 FV under review.

Source: OCBC Research - 13 Feb 2015