How Did The Oilseeds and Grains Business Segment Of Wilmar International Limited Fare In 2016?

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

The company recently announced its 2016 full year results. Given the number of different segments that Wilmar has, I thought it would be useful for investors to take a separate look at the performance of each of the three operational segments.

I had previously reviewed the Tropical Oils segment in here. In this article, I will have a quick review of the performance of the Oilseed and Grains segment in 2016.

Note: A review of the Sugar segment has since been published. It can be found here.

Wilmar’s 2015 annual report had a good description of what the Oilseed and Grains segment does. It “comprises the processing, merchandising, branding and distribution of a wide range of agricultural products including non-palm and lauric edible oils, oilseeds, flour and rice milling, corn processing and downstream products like wheat and rice noodles.”

The table below shows the revenue and profit numbers that the Oilseeds and Grains segment produced for the fourth quarter and whole of 2016 and 2015:

Wilmar oilseeds and grains business income statement
Source: Wilmar 2016 results announcement

There are two key observations.

Firstly, revenue in 2016 increased from 2015. That was driven mainly by stronger revenue in the Consumer Products sub-segment, which in turn was driven by higher sales volume.

Secondly, the Oilseeds and Grains segment saw a big decline in profit before tax in 2016. This is largely the result of untimely raw material purchases that led to the segment suffering a loss of US$343.8 million in the second quarter of the year.

On the future of its Oilseeds and Grains business, Wilmar expects to benefit from the recent lifting of restrictions in China on oilseeds and grains processing on foreign companies.

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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.