PPB expected to post weaker third-quarter profit as Wilmar margins come under pressure

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PPB expected to post weaker third-quarter profit

Highlights

Wilmar International Ltd posted core net profit of U.S.$267.3 million for 3QFY2026, down 25% year-on-year, putting pressure on PPB Group Bhd's earnings.
Wilmar's profit decline was driven by higher input costs in its food segment and weaker soybean crushing margins in China, which are expected to persist into 4Q2026.
Production at Wilmar's Indonesian plantations is expected to decline due to drought and fires, but pure upstream Malaysian plantation companies are forecast to report stronger quarterly earnings growth.

This article was translated from the original. Read the original version by our correspondent here.

Expected results and reasons for Wilmar's weakness

The Edge Malaysia reported that CIMB Securities expects PPB Group Bhd to post weaker earnings for the third quarter of financial year 2026 after its key associate, Wilmar International Ltd, reported a decline in quarterly performance.

The Singapore-listed palm oil producer recorded core net profit of U.S.$267.3 million for the third quarter, down 25% from the same period a year earlier, according to a research note dated Friday. Wilmar is the group's largest profit contributor, accounting for about 80% of PPB's profit before tax.

CIMB Securities said Wilmar's core net profit for 3QFY2026 declined significantly due to higher input costs in its food products segment, as well as weaker soybean crushing margins in China. The research firm said Wilmar expects sluggish consumption in China and weak soybean crushing margins to persist in 4Q2026, with no immediate plans to raise consumer prices to offset rising input costs.

Regional implications for the plantation sector

In addition to margin pressure, production at Wilmar's plantations in Indonesia is expected to decline amid worsening drought conditions in South Sumatra and Kalimantan. Wilmar is currently investigating the impact of crop damage linked to forest fires.

However, CIMB Securities said pure upstream Malaysian plantation companies with exposure to Indonesia, including Kuala Lumpur Kepong Bhd, SD Guthrie Bhd and Genting Plantations Bhd, are expected to report stronger quarter-on-quarter earnings from their respective Indonesian divisions in the third quarter. This suggests that performance pressures are not uniform across the sector, but are instead more concentrated in specific operating exposures and product margins.

In our previous article on Malaysia's lower crude palm oil (CPO) reference price for November, we explained how the reference price was set lower than in October but the export duty remained at the maximum rate of 10% because the price stayed above the threshold of RM4,050 per tonne. We also highlighted that this keeps export costs stable for industry players and could affect the competitiveness of regional shipments, providing important context as companies now face margin and input cost pressures.

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