SINGAPORE – Shares of agribusiness group Wilmar International tumbled more than 4% on Oct 29, extending a months-long decline as the company faced an Indonesian police investigation into plantation fires and reported weaker underlying third-quarter earnings.
The counter was trading at $3.12 as at 10.47am, down 4.6% or 15 cents from its previous closing price of $3.27. Some 4.7 million shares changed hands. This was the lowest the stock has been trading at since Jan 21.
The shares subsequently pared some losses to trade at $3.14 as at noon.
The sell-off on Oct 29 marked a further slide for Wilmar’s shares, which have shed more than 20% over the past six months. Shares of Wilmar were trading at $3.99 on Apr 8.
Wilmar revealed on Oct 28, in response to queries from the Singapore Exchange Regulation, that Indonesian police were conducting preliminary investigations into fires affecting about 28 hectares of plantation land belonging to its subsidiaries in West Kalimantan.
The group said it was cooperating fully with the authorities.
According to Wilmar, its internal investigations found that the fires originated either outside its concession boundaries or in non-planted areas, including land farmed by local communities and conservation areas under its management.
The mainboard-listed company said it found no evidence linking the fires to its land preparation or clearing activities. It estimated losses involving crops and oil palms at less than US$500,000 (S$640,000).
The disclosures came after the regulator issued a second round of queries to listed agribusinesses with operations in Indonesia, seeking further information on their exposure to the fires and haze affecting Singapore.
The regulator also asked companies to disclose any investigations by the authorities in Singapore, Indonesia or elsewhere, and whether they had links to 10 Indonesian companies issued 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.
Separately, Wilmar’s chairman and CEO Kuok Khoon Hong was among the company representatives who attended a closed-door meeting with Senior Minister K Shanmugam and other Singapore ministers on Oct 28 over the haze.
At the meeting, Shanmugam urged the companies to cooperate fully with investigations into the Indonesian fires, warning that the authorities would use their powers to establish responsibility for the transboundary haze.
Wilmar maintained that the fires and haze had not resulted in, and were not expected to result in, any material operational, financial, legal or regulatory impact on the group.
Weak earnings
The developments came as Wilmar reported weaker underlying earnings for the third quarter ended Sept 30.
Although its net profit stood at US$281 million, reversing a year-ago loss that had been weighed down by a one-off compensation expense paid to the Indonesian government, its core net profit fell 25.2% year on year to US$267.3 million.
The group attributed the weaker underlying performance partly to higher raw material costs and lower soybean crushing margins. THE BUSINESS TIMES
