How Did Wilmar International Limited’s Various Businesses Fare In The First Quarter Of 2017?

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. 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 2017 first-quarter 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.

Sales volume of key segments

Here’s a table showing the sales volumes of the three segments in the first quarters of 2017 and 2016:

Source: Wilmar 2017 first quarter earnings release

From the table above, we can see that the biggest jump in sales volume was in the Sugar segment. The increase was mainly due to higher merchandising activities during the quarter.

The sales volumes for the other two segments were relatively flat. The Tropical Oils segment posted marginally higher sales volume on the back of a small increase in the FFB (fresh fruit bunches) yield. Meanwhile, the Oilseeds and Grains segment delivered slightly lower sales volume due to seasonal weakness in its consumer products business (the early Chinese Spring festival in 2017 had a negative impact).

Revenue of key segments

The table below shows the revenue of Wilmar’s various segments in the first quarters of 2017 and 2016:

Source: Wilmar 2017 first quarter earnings release

Despite experiencing a low increase in sales volume, the Tropical Oils segment’s revenue showed strong growth. This was due to higher CPO (crude palm oil) prices. Revenue from the Oilseeds and Grains segment did not change much, reflecting a similar dynamic in its sales volume. As for the Sugar segment, it had benefitted from both higher sales volumes and better sugar prices.

Profitability of key segments

We’re down to the profit made by Wilmar’s various segments and they can be seen in the table below:

Source: Wilmar 2017 first quarter earnings release

The Tropical Oils segment has turned its higher revenue and sales volumes into increased profits. The same goes for Oilseeds and Grains.

Unfortunately, the same can’t be said for the Sugar segment. Higher sales volume and stronger sugar prices did not translate into better profitability. In fact, the segment saw its pre-tax loss widen considerably from the first quarter of 2016. Wilmar attributed the phenomenon to seasonal maintenance of the Australian milling business that usually takes place in the first half of each year, and a weaker showing from the Sugar segment’s merchandising and refining business.

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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.