WILMAR,SIME to Golden AGRI

UPDATE 3-Wilmar profit soars; sees prices staying firm
(Adds CEO comments) By Ovais Subhani SINGAPORE, May 13 (Reuters) -

Wilmar International, the world's largest listed palm oil firm, said on Tuesday it expected to continue to profit from soaring commodity prices after posting a seven-fold jump in first-quarter earnings.

Wilmar shares rose more than 2 percent to an 11-week high, and analysts said they were surprised by the sharp rise in profits in a quarter that usually sees a lull in the palm oil business.
"Profit margins were significantly ahead of our expectations.

We expect subsequent quarters to improve on seasonally higher production volume and higher crude palm oil selling prices," said Goldman Sachs analyst Patrick Tiah.
Tiah said he was unlikely to change his buy rating or S$5 target price for Wilmar, given the risk on downstream refining margins that could be volatile from quarter to quarter.

UBS analyst Gaurang Bhatia said Wilmar's pretax profit margin of $27 per tonne for the quarter, compared to a year-ago $15, was unsustainable as more refining capacity was likely to be added in the industry.

Chairman and CEO Kuok Khoon Hong said palm oil prices could be supported as record crude oil prices were fuelling U.S.
and European demand for biodiesel, which can be made from palm oil.
"Palm oil prices are expected to remain firm in the forseeable future," he told a briefing, adding that if crude oil prices topped $130 a barrel that would mean crude palm oil would fetch over $900 a tonne.

"If the U.S. continues to support biofuel and European governments go for biodiesel then palm oil would remain at high prices. The current prices are not cheap." Malaysia's benchmark contract for palm oil futures was quoted at 3,551 ringgit ($1,106) per tonne on Tuesday, down 21 percent since a record 4,486 ringgit a tonne in March.

Wilmar is the world's biggest palm oil refiner but is cushioned from soaring feedstock costs because of its huge plantation acreage.
Kuok also said the firm, which had a capital expenditure plan of $800 million to $1 billion at the start of the year, would continue to look for acquisition targets and expansion in new markets such as Africa and central Asia.

FAVOURABLE OUTLOOK Wilmar, which owns oil palm plantations and runs milling, crushing, refining and processing plants in Indonesia and Malaysia, said January-March net profit rose to $343 million from a restated $49.7 million a year earlier.
Revenue rose to $7.1 billion from nearly $2 billion.

"While global economic growth in 2008 remains uncertain, led by concerns about a possible U.S. recession and credit tightening, the prospects for agricultural commodities continue to be favourable," the company said in a statement.

Wilmar has four biofuel plants in Indonesia and Malaysia, with combined annual production capacity of 1.05 million tonnes.

Wilmar is expected to post full-year 2008 net profit of $921.3 million, against $580.4 million in 2007, according to 14 analysts polled by Reuters Estimates before Tuesday's results.

Wilmar made its trading debut in Singapore in August 2006 following a reverse takeover of Ezyhealth Asia Pacific.
Last year, it completed the purchase of the palm plantation and edible oils businesses belonging to Malaysia's Kuok Group, a move which doubled its plantation landbank to about 570,000 hectares (1.4 million acres).
Headquartered in Singapore, Wilmar operates in 20 countries across four continents, with a primary focus on Indonesia, Malaysia, China, India and Europe.
Shares in Wilmar, valued at about $23 billion, have lost 6 percent since the start of the year, after more than doubling last year, while the Singapore stock market <.FTSTI> has fallen 8 percent.

Wilmar trades at about 26 times forecast earnings, compared with 11 times for local peer Golden Agri and 16 times for Sime Darby , the world's largest palmoil producer.