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A Quick Look at Wilmar’s Results

Wilmar International Ltd (SGX: F34), Asia’s leading agriculture business group, released its full year results last week.  Sales saw an increase of 1.7% to US$45.5b while profits fell by 21.6% to US$1.26b on a yearly basis. Diluted earnings per share (EPS) came in at US$0.196, a 22% decrease compared to US$0.25 in 2011. This beat analysts’ estimates of US$0.17. After the release of the result last week, Wilmar’s share price slid by 5 cents to close at $3.63 on Friday for a 1.4% fall, resulting in a Price-Earnings ratio of 19.

This fall in profit can be attributed largely to an 89% decline in fair value gains of its biological assets from US$262.7m in 2011 to US$28.8m in 2012. Costs for raw materials and operating expenses were relatively flat as the former rose by 0.5% while the latter declined by 1.9% on a yearly basis.

The company also saw lower selling prices but higher sales volumes in most of its business segments. Its Palm & Lauric oil products, which accounted for 49.9% of the company’s overall revenue in 2012, saw revenues fall by 1% to US$22.7b even though sales volume were up by 14% to 23.1 million metric tonnes (MT). The fall in price of Crude palm oil (CPO) by 21% since the start of 2012 added to Wilmar’s operating difficulties in this segment.

Wilmar’s Consumer Products and Sugar-related segments also saw similar trends in terms of selling prices and sales volumes. Monthly sugar prices, quoted in US dollars, have also fallen by 18% since July 2012, putting pressure on the selling prices of Wilmar’s sugar-related products.

The company declared a Final ordinary dividend of S$0.03 per share, bringing the total dividends paid out in 2012 to S$0.05 per share, 18% lower than 2011’s dividends. At Friday’s closing price of $3.63 per share, Wilmar’s dividends for 2012 represented a dividend yield of 1.38%.

Wilmar also announced that it would buy a 53.7% stake in Noble Plantations Pte Ltd, a wholly-owned subsidiary of natural resource management company Noble Group Ltd (SGX: N21). Noble Plantations will be involved with palm projects in Papua, Indonesia.

Wilmar’s Chairman and CEO, Mr. Kuok Khoon Heng commented that: “The Group performed satisfactorily in 2012 despite the challenging operating environment for oilseeds and grains as well as declining CPO prices. Whilst uncertainties in the global economy remain, we are cautiously optimistic of our long term prospects due to good economic growth in our main markets of China, India and Indonesia and the robust business model we have built up over the years.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore Contributor Chong Ser Jing doesn’t own shares in any companies mentioned.