3 Things Investors Should Know From Wilmar International Limited’s Latest 2016 Results

Wilmar International Limited (SGX: F34) is a large company in many ways.

It is a leading agri-business group in Asia, one of the largest oil palm plantation companies listed in Singapore, and is also one of the largest companies in our local stock market given that it is a component of the Straits Times Index (SGX: ^STI).

Currently, Wilmar operates through three main operational segments: Tropical Oils, Oilseeds and Grains, and Sugar. It also has a fourth segment called “Others.”

The company recently reported its 2016 full year results. Let’s look at three useful pieces of information from the results announcement:

1. The overall numbers

The following table shows some important items from Wilmar’s income statement from 2016 and 2015:

Wilmar profit table
Source: Wilmar 2016 full year earnings release

We can see that Wilmar’s results for 2016 is mixed – it had stronger revenue but weaker net profit.

The company had enjoyed revenue growth due to higher overall sales volume. Meanwhile, the profit decline was driven mainly by losses in the Oilseeds and Grains segment (more on this later) that came on the back of untimely purchase of raw materials.

2. The positives

Firstly, the Tropical Oils and Sugar segments reported large profit before tax (PBT) gains for 2016; the former saw a 40% jump in PBT while the latter enjoyed a 49% increase.

Secondly, the company’s sales volumes for its segments either grew, or was flat, in 2016.

Lastly, Wilmar ended 2016 on a high note with all its three major segments reporting year-on-year growth in revenue and profit before tax in the fourth quarter of the year.

3. The negatives

As mentioned earlier, the Oilseeds and Grains segment did not perform well in 2016. Although the segment managed to earn a positive US$251.1 million in profit before tax in 2016, it was down by 64% compared to 2015. The segment had suffered a loss of US$343.8 million in the second quarter of 2016 which dragged down its bottom-line for the entire year.

In all, Wilmar had a good end to 2016, although its numbers for the whole year were a little mixed.

But going forward, investors should still expect volatility in Wilmar’s income to show up from time to time due to the company’s exposure to commodities.

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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 Lawrence Nga doesn’t own shares in any companies mentioned.