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Wilmar International Limited’s Latest Earnings: Closing the Year on a High

Yesterday, Wilmar International Limited (SGX: F34) reported its 2016 fourth quarter and full year earnings. The reporting period was for 1 October 2016 to 31 December 2016.

As quick background, Wilmar is Asia’s leading agribusiness group. It is engaged in a variety of businesses, has 500 manufacturing facilities, and controls an extensive distribution network which covers China, India, Indonesia and some 50 countries.

Wilmar has four main business segments: Tropical oils (Plantation and Manufacturing), Oilseeds and Grains (Manufacturing and Consumer Products), Sugar (Merchandising, Manufacturing and Consumer Products), and Others.

To learn more about the company, you can go here. You can also catch up with its 2016 second earnings report here.

Financial highlights

The following’s a quick take on some of Wilmar’s latest financial figures:

  1. For the fourth quarter of 2016, Wilmar’s revenue spiked by 26.7% year-on-year to US$11.9 billion. For the full year, the agri-business conglomerate raked in US$41.4 billion in revenue, some 6.8% more than the year before.
  2. The rise in revenue for the quarter led Wilmar’s net profit to soar by 69.9% year-on-year to US$560.8 million. For 2016, Wilmar recorded US$972.2 million in profit, down by 5% from 2015.
  3. The company’s earnings per share (EPS) also saw a 71.2% increase from US$0.052 in the fourth quarter of 2015 to US$0.089 in the reporting quarter. For the whole of 2016, Wilmar made US$0.154 in EPS, a 4.3% decline from the previous year.
  4. For the fourth quarter of 2016, cash flow from operations was negative US$124.7 million with capital expenditure coming in at US$188.3 million. This gave Wilmar negative free cash flow of US$313 million. For the full year, Wilmar recorded US$401.2 million in free cash flow (US$1.12 billion in cash flow from operations and US$722.4 million in capex). The fourth quarter of 2015 saw Wilmar generate negative free cash flow of US$850.1 million while the entire year saw the company produce US$1.42 billion in free cash flow.
  5. As of 31 December 2016, Wilmar had US$1.18 billion in cash and equivalents and US$17 billion in borrowings. This is nearly the same from a year ago when the self-same figures were US$1.30 billion and US$17.4 billion, respectively.

So, Wilmar closed 2016 on a high with a sharp rise in revenue and profit in the fourth quarter. The conglomerate also managed to generate positive free cash flow.

Given that Wilmar still maintains a sizable amount of debt on its balance sheet, we should continue to keep an eye on its ability to generate free cash flow. Around US$12.7 billion of its debt is repayable within a year.

The board of directors proposed a final dividend of S$0.04 per share. Together with the interim dividend of S$0.025 per share, Wilmar will be paying out a total dividend of S$0.065 per share for 2016. This is a decline from the S$0.08 per share paid out in 2015.

Operational highlights

For 2016, Wilmar’s revenue rose from the bountiful performance from the Tropical Oils and Sugar segments. Subsequently, both segments experienced an increase in profit before tax (PBT) compared to 2015. The PBT for Tropical Oils came in at US$689.2 million in 2016 (up 40%) while the Sugar segment’s PBT was US$84.3 million (up 49%).

Unfortunately, the strong performance in the above two segments was undone by lower profit at the Oilseed and Grains segment. The segment posted a 63.6% decline in PBT to US$125.3 million.

Regarding Wilmar’s future, this is what the company’s chairman and chief executive officer, Kuok Khoon Hong, said in the earnings release:

“The strong performance in the fourth quarter enabled the Group to overcome the losses incurred in the second quarter of the year and achieve satisfactory performance for the full year. All segments achieved good volume and margin growth during the second half of the year. Looking ahead, the recent lifting of restrictions in China on oilseeds and grains processing on foreign companies is expected to benefit our operations.

Barring unforeseen circumstances, performance in 2017 is expected to be satisfactory.”

At its closing share price of S$3.90 yesterday, Wilmar traded at 25.3 times trailing earnings and offers a trailing dividend yield of 1.7%.

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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 Chin Hui Leong doesn’t own shares in any companies mentioned.