SINGAPORE — Net profit at Wilmar International Ltd. fell 5.7% to $1.128 billion for the 2018 fiscal year ended Dec. 31, 2018, impacted by a tough operating environment.
Revenue for the year increased 2.1% to $44.49 billion, up slightly from $43.57 billion in the same period of last year. Revenues were supported by higher sales volumes across all segments, which partially was offset by lower commodity prices.
“The group performed well in 2018 even though we were affected by low palm oil and sugar prices in our upstream operations and volatile soybean market created by the U.S., China trade tensions,” said Kuok Khoon Hong, chairman and chief executive officer of Wilmar. “The group’s success in its strategy to develop more stable downstream processing and branded consumer products enabled us to achieve with growth and maintain profit in this challenging operating environment.”
The Oilseeds & Grains segment’s pretax profit for the year jumped 20% to $875 million, which compared with $727.2 million in the same period last year. The fourth-quarter profit fell to $115.2 million from $206.4 million in the same quarter in 2017. Wilmar noted the profit fall was due to weaker crush margins but was offset by performance in Consumer Products.
“Crush margins for (the first quarter of fiscal 2019) will be adversely impacted by the sharp decline in meal demand from the outbreak of African swine fever in China and the sharp drop in Brazilian soybean basis, but this is expected to improve in (the second quarter of fiscal 2019),” Hong said.
Consumer Products sales improved by 10% to 6 million tonnes for fiscal year 2018. With stronger sales from the manufacturing businesses earlier in the year, overall sales volume for the segment increased 12% to 37.2 million tonnes. Sales for the fourth quarter increased 3% to 9.4 million tonnes, pushed by higher demand for consumer products.
“Looking ahead, we are reasonably optimistic that performance for FY2019 will be satisfactory,” Hong said. “The group recently converted its China holding company into a joint-stock company, with a view to a possible sperate listing in China. We would like to emphasize that as work on the proposed listing is still in progress, shareholders are advised to exercise caution in trading their shares in the company. There is no certainty or assurance as at the date of this announcement that the listing proposal will be carried out.”
Wilmar’s business activities include oil palm cultivation, oilseed crushing, edible oils refining, sugar milling and refining, manufacturing of consumer products, specialty fats, oleochemicals, biodiesel and fertilizers as well as rice and flour milling. At the core of Wilmar’s strategy is an integrated agribusiness model that encompasses the entire value chain of the agricultural commodity business, from cultivation, processing, merchandising to manufacturing of a wide range of branded agricultural products. It has more than 500 manufacturing plants and an extensive distribution network covering China, India, Indonesia and some 50 other countries. The group has a multinational workforce of about 90,000 people.