SINGAPORE — Core net profit at Wilmar Ltd. jumped 120% to $438.4 million for the fourth quarter ended Dec. 31, up from $199.4 million in the same period of last year. The company attributed the results to its strong performance from Tropical Oils and Oilseeds & Grains, coupled with the absence of impairment loss in sugar.
However, the improved results were partially offset by lower contributions from Wilmar’s associates and joint ventures.
Net profit for 2019 increased 15% to $1.29 billion. The year’s profit was boosted by the Tropical Oils and Consumer products while the oilseeds crushing business was affected by the African swine fever (ASF) outbreak in China, turned around with better-than-expected results in the second half of 2019.
Revenue for the fourth quarter was $11.25 billion, a slight increase compared with the $11.19 billion in the fourth quarter in 2018.
Overall 2019 sales volume increased 4% but Wilmar attributes the 4.2% decline in revenue to low commodity prices.
“We achieved a strong set of results in FY2019 amidst the challenging global environment,” said Kuok Khoon Hong, chairman and chief executive officer of Wilmar. “Tropical Oils’ performance for the coming year should benefit from higher palm oil prices, especially in our oil palm plantations. The current 2019 novel coronavirus (COVID-19) outbreak has brought volatility to the commodity markets and further challenges to our operating environment, especially in China. At the moment, we do not expect major impact to our businesses as we are mainly operating in the food products industry. Nevertheless, a prolonged outbreak of COVID-19 may have a greater impact on our operations.”
Wilmar’s Oilseeds & Grains segment pretax profit jumped 61% to 185.4 million in the fourth quarter of 2019. The segment’s performance was supported by improved crush margins and seasonal demand for consumer products. For the year, the Oilseeds & Grains segment pretax profit decreased 27% to $636.9 million as overall crush volumes fell due to the ASF outbreak in the first half of 2019.
Tropical Oils pretax profit for the fourth quarter increased 116% to $287.3 million, up from $134.1 million in the fourth quarter of 2018.
“Tropical Oils was boosted by good performance from merchandising activities and downstream processing margins,” the company said. “This was further supported by higher contributions from the plantation business, in line with higher palm oil prices during the quarter leading to higher gains arising from changes in fair biological assets.”
For 2019, the Tropical Oils overall profit increase 54% to $841.6 million.
“Our China listing is undergoing the approval process and progressing within the standard time frame, with no significant issues encountered to date,” Khoon Hong said. “We expect the listing to be approved this year even though it may be slightly delayed by the COVID-19 outbreak. 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.