Wilmar sweetens full-year dividend to record 19.5 S cents as earnings surge 19%

AGRIBUSINESS Wilmar International is set to hand out its highest-ever total cash dividend since listing, at S$0.195 per share for FY2020, amid a 18.6 per cent lift in full-year earnings disclosed on Monday after trading hours.

The mainboard-listed firm has proposed a special dividend of S$0.065 and final dividend of S$0.09 per share for the half-year ended December. Its interim dividend in August was S$0.04 cents per share.

Wilmar's sweetener for shareholders comes as its net profit for FY2020 surged 18.6 per cent to US$1.53 billion, on the back of a 18.5 per cent rise in revenue to US$50.5 billion, driven by growth across all segments.

Excluding gains from non-operating items and fair value changes of biological assets, Wilmar's core net profit for FY2020 improved 18 per cent to US$1.49 billion.

H2 net profit rose more modestly by 4.3 per cent to US$923.6 million, while its revenue grew 24.3 per cent to US$27.9 billion.

The H2 showing was dampened by the feed and industrial products segment, which saw mark-to-market losses on hedging derivatives in Q4. However, Wilmar said that these losses will reverse in the coming quarters.

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H2 net profit was also hit by higher tax expenses and higher allocation of profit to non-controlling interests. The latter arose from the 10 per cent dilution of Wilmar's interest in Yihai Kerry Arawana Holdings (YKA), which listed in Shenzhen in October last year.

Nevertheless, the firm enjoyed robust revenue expansion in H2 due to strong volume growth, firmer commodity prices and the results consolidation of food manufacturer Goodman Fielder.

The food products segment had a 16 per cent pre-tax profit rise to US$657.4 million in H2, thanks to strong sales volume growth and better margins in the oil, flour and sugar businesses. Wilmar also enjoyed a "sharp recovery" in volume for its medium pack and bulk products from the hotel, restaurant and catering sector, as China recovered from Covid-19.

For FY2020, the food products segment posted an 18 per cent rise in profit to US$1.15 billion. Consumer products sales volume grew 22 per cent to 9.4 million MT, while medium pack and bulk sales increased 7 per cent to 17.8 million MT, aided by increased brand awareness.

However, the feed and industrial product segment, which includes tropical oils, oilseed and grains and sugar, saw a 5 per cent slide in pre-tax profit to US$425.1 million for H2, arising from the mark-to-market losses. Nevertheless, crushing volumes and margins were healthy, thanks to a recovery in hog production in China, lifting demand for animal feeds.

The segment's profit rose by 26 per cent to US$795.9 million for FY2020, on the back of strong oilseeds crushing in H1. Segment volume rose 11 per cent to 58.1 million MT for the full-year.

Wilmar also had upbeat results in its plantation and sugar milling business, where pre-tax profit for H2 tripled to US$187.8 million, benefiting from firmer palm and sugar prices. Production yield for palm plantations increased by 4 per cent due to favourable weather conditions, while total fresh fruit bunches production rose 5 per cent.

For the full year, the plantation and sugar milling business posted a profit of US$104.8 million, turning around a loss of US$41.3 million in the previous year. However, this was partly offset by a US$20 million impairment of sugar milling assets in India in H1.

Beyond its core verticals, Wilmar also recorded a pre-tax profit of US$100.7 million in other mark-to-market gains and investment income from its portfolio. Its joint ventures and associates improved their contributions by 7 per cent to US$118.1 million in H2, mainly due to better results from investments in Africa and Asia.

Kuok Khoon Hong, chairman and CEO of Wilmar, said that the company produced a "good set of results" for all core segments despite the severe impact of the pandemic, showing the resilience of the business.

"We are continuing to build, especially in China, more integrated plants in new locations and develop new high growth and complementary businesses like central kitchen, soy sauce, vinegar and yeast. This will widen our range of food product offerings and help us reduce manufacturing, distribution and marketing costs," he said.

Shares of Wilmar closed at S$5.51 on Monday, down 1.08 per cent, before the results release.