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How Did The Tropical Oils Business Of Wilmar International Limited Fare In 2017?

In late February, Wilmar International Limited (SGX: F34) released its 2017 full year earnings update. As a quick introduction, Wilmar is an agricultural company that has four business segments: Tropical Oils; Oilseeds and Grains; Sugar; and Others.

Given the complexity of Wilmar’s business, it may be useful for investors to have a look at each segment individually. In this article, I will have a quick review of the business performance of the Tropical Oils segment in 2017. [Editor’s note: Articles discussing the Sugar and Oilseeds and Grains segments have been published. They can be found here and here.]

The following table shows the revenue and profit numbers that the Tropic Oils segment delivered for the fourth quarter and the whole of 2017 and 2016:

Source: Wilmar 2017 results announcement

We can see that the Tropical Oils segment experienced a mixed year in 2017. Revenue was up by 7%, driven mainly by higher crude palm oil (CPO) prices. But, profit before tax for the year had declined by 38% as a result of lower processing margins in the downstream portion of the segment.

Here’s a table showing some production numbers for the Tropical Oils segment for the same time periods as the previous table:

Source: Wilmar 2017 results announcement

Wilmar’s production of fresh fruit bunches (FFB) for 2017 was 3% higher compared to 2016. The company experienced a higher FFB yield, which increased from 19 tonnes per hectare in 2016 to 19.7 tonnes per hectare. The extraction rate remained flat in 2017 at 20%.

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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.