Meet the biggest loser in agribusiness for Q3

It's a looming 32% dive.

According to Nomura, it expect another muted quarter for supply chain players as fundamental trading conditions remain tight (crush margins, sugar prices weak, etc.).

Here's more from Nomura:

Overall, we expect Wilmar’s earnings to fall ~32%, Olam’s by ~20% y-y while Noble’s earnings would be in positive (from a loss in 3Q11). For Wilmar, there has been lot of excitement lately (improvement in industry crush margins, commentary from China Agri) but we believe it may take more time for Wilmar to turn positive in crush margins – the street may be disappointed yet again.

For Olam, this quarter is less than 10% of FY earnings so should not matter much, and Noble should continue to be strong on energy side, with improvement in Agri.

Wilmar: China crush may remain weak during 3Q12 as well

  • Crush margins in China remain weak – though the crush margins might have recovered from 1H12 lows, we expect them to stay in red during 3Q12 as well.
  • Slight improvement in refining margins sequentially (Indo margins may be good but Mal margins weak). 
  • As sugar cane crushing season commences, we expect positive PBT contribution from sugar milling 
  • Consumer pack margins should mostly be in line with last quarter.
  • Sharp fall in CPO prices may suppress palm earnings, in our view

Noble: Agri margins may show modest improvement

  • We estimate Noble’s 3Q12F adjusted earnings at ~USD140mn compared to a loss during 3Q11
  • We expect overall 3Q12F volumes to remain flat y-y. Agri margins should improve as sugar begins to contribute and marginal improvement in China crush margins.
  • MMO business should be mostly in line with the last few quarters. 

Olam: 1Q, seasonally muted quarter for Olam 

  • We expect strong volume growth in Edible nuts/food staples segments
  • Continuing weak global demand for cotton and weak demand for timber in China, India and Brazil may decrease Industrial raw material volumes y-y. 
  • We estimate weak NC/ton in industrial raw materials segment 


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