Wilmar’s net profit surges 21% to US$1.60b in 2011

Sales volume from its Oilseeds & Grains segment grew the most, by 30% last year.

According to a financial statement, Wilmar International Limited posted a 57% increase in net profit to US$500.0 million for the quarter ended 31 December, 2011. The Group’s net profit for the year ended December 31, 2011, increased 21% to US$1.60 billion.

The improvement in net profit was largely due to better performance in the Oilseeds & Grains segment, contributions from the new Sugar segment as well as a sharp improvement from Associates.

Total revenue was up 27% to US$11.52 billion for the quarter and up 47% to US$44.71 billion for the year on the back of increased sales volume, particularly from Oilseeds & Grains and Consumer Products as well as contribution from the Sugar segment.

Excluding non-operating items and net gains from biological assets, the Group’s net profit more than tripled to US$264.5 million in 4Q2011 (4Q2010: US$83.5 million) and increased 44% to US$1.52 billion in FY2011 (FY2010: US$1.05 billion).

The non-operating items showed a pre-tax income of US$71.3 million for 4Q2011, which included foreign exchanges differences from intercompany loans to subsidiaries, gains or losses from investment securities, fair value changes on embedded derivatives of the Group’s convertible bonds, interest expense directly attributable to the funding of the Sucrogen acquisition and an accounting profit within the Sugar segment relating to pre-acquisition hedging reserves.

Business Segment Performance
Merchandising & Processing – During the quarter, Palm & Laurics recorded an 8% decline in sales volume to 5.3 million metric tonnes due to weaker demand from Europe and India. Margins contracted in line with unfavourable market conditions in China and India, the financial crisis in Europe and the disadvantaged position of Malaysia given the new Indonesian export duty structure.

However, the Group’s Indonesian operations benefited from the changes in the Indonesian export duty and hence the Group was able to record a respectable pretax profit of US$108.6 million in 4Q2011.

Oilseeds & Grains registered an increase of 30% in sales volume to 6.2 million MT driven by improved demand from the livestock industry as well as higher flour and rice volume. However, crush margins in China remained challenging in 4Q2011.

Nevertheless, the pretax profit of US$1.7 million was a sharp recovery from the pretax loss of US$173.2 million in 4Q2010. Consumer Products recorded a 14% increase in sales volume to 1.2 million MT mainly due to improved sales of consumer pack oils, flour and rice in China. Selling prices for consumer pack oils were higher during the quarter, following a price increase on 1 August 2011. But margins were lower compared to 4Q2010 as the price increase was lower than the increase in the cost of edible oils feedstock. Pretax profit declined 12% to US$33.2 million.

Plantations & Palm Oil Mills - Excluding a revaluation gain from biological assets of US$262.7 million, pretax profit was US$113.4 million, a decrease of 12% over 4Q2010 as a result of lower realised CPO prices and higher unit production cost. The Group’s production of fresh fruit bunches increased by 16% to 1.1 million MT reflecting an increase in mature hectarage and an improvement in production yield. Yield was up 5% to 5.4 MT per hectare due to improved crop trend, improving yield of young palm trees as well as favourable weather conditions.

Sugar is a new segment following the Group’s acquisition of Sucrogen Limited and PT Jawamanis Rafinasi in FY2010 and Proserpine Co-operative Sugar Milling Association and PT Duta Sugar International in FY2011. The segment comprises the Milling and Merchandising & Processing businesses. For FY2011, this new Sugar segment reported a pre-tax profit of US$141.3 million. Excluding non-operating items, pre-tax profit was US$94.2 million.

In 4Q2011, Milling sales volume was 1.1 million MT while pretax profit was US$101.9 million. Excluding non-operating items, pretax profit was US$42.3 million. Earnings for the quarter were affected by the receipt of poorer quality standover cane from the previous season with high impurity levels and low cane extraction rate, as well as wet weather downtime in certain regions.

Merchandising & Processing sales volume was 567,000 MT while pretax loss was US$3.5 million in 4Q2011. Excluding non-operating items, pretax loss was US$12.7 million for the quarter. Performance for the quarter was affected by lower margins and sales volume, additional maintenance costs and some provisions.

Others segment saw a decline of 59% in pretax profit to US$24.7 million due to decrease in gains from investment securities, lower fertiliser profit as well as lower shipping profits.

Associates saw a sharp improvement, contributing US$42.0 million in 4Q2011 compared to a loss of US$21.1 million in Q42010.

Dividend
The Board has proposed a final tax exempt (one-tier) dividend of S$0.031 per share. Including the interim dividend of S$0.03 per share paid in September 2011, the total dividend paid and proposed for FY2011 is S$0.061 per share, representing a dividend payout of about 20%.