GaininG StrenGth in adverSity - wilmar- ... Wilmar Oils & Fats (Stockton), LLC, began processing palm,

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  • Wilmar International Limited Annual Report 2013

    GaininG StrenGth in adverSity

  • ContentS 1 Corporate Profile

    2 Chairman’s Message

    6 Corporate Highlights

    10 Global Presence

    12 Core Values

    13 Performance Overview

    14 Financial Highlights

    16 Board of Directors

    22 Key Management Team

    23 Corporate Information

    26 Operations Review

    39 Awards & Accolades

    Wilmar International Limited, founded in 1991 and headquartered in Singapore, is today Asia’s leading agribusiness group. Wilmar is ranked amongst the largest listed companies by market capitalisation on the Singapore Exchange. Wilmar’s business activities include oil palm cultivation, oilseed crushing, edible oils refining, sugar milling and refining, specialty fats, oleochemical, biodiesel and fertiliser manufacturing and grain processing. At the core of Wilmar’s strategy is a resilient integrated agribusiness model that encompasses the entire value chain of the agricultural commodity processing business, from origination and processing to branding, merchandising and distribution of a wide range of agricultural products. It has over 450 manufacturing plants and an extensive distribution

    network covering China, India, Indonesia and some 50 other countries. The Group is backed by a multinational workforce of about 90,000 people. Wilmar’s portfolio of high quality processed agricultural products is the preferred choice of the food manufacturing industry, as well as the industrial and consumer food businesses. Its consumer-packed products occupy a leading share in its targeted markets. Through scale, integration and the logistical advantages of its business model, Wilmar is able to extract margins at every step of the value chain, thereby reaping operational synergies and cost efficiencies. Wilmar remains a firm advocate of sustainable growth and is committed to its role as a responsible corporate citizen.

    Corporate profile 44 Corporate Social

    Responsibility

    54 Investor Relations

    56 Human Capital Management

    58 Information Technology

    59 Risk Management

    61 Corporate Governance

    77 Financial Report

  • Wilmar international limited AnnuAl RepoRt 20132

    Chairman’S meSSaGe

    Wilmar expanded its sugar business footprint in Africa, India and Brazil through strategic investments.

    Fy2013 in revieW I am pleased to report that Wilmar’s performance in 2013 has continued to improve amidst global economic recovery, achieving robust earnings growth in Palm & Laurics, Oilseeds & Grains, Consumer Products and Sugar.

    The Group recorded US$1.32 billion net profi t in FY2013 versus US$1.26 billion in FY2012. Excluding non-operating items and changes in fair value of biological assets, the Group’s core net profi t from operations increased 12% to US$1.30 billion in FY2013. Total revenue declined marginally by 3% to US$44.09 billion, versus US$45.46 billion in FY2012, primarily due to signifi cantly lower palm prices.

    Earnings per share rose to 20.6 US cents in FY2013, as compared to 19.6 US cents in FY2012, underlining our focus on shareholder value creation. The Group’s balance sheet remains strong, with total assets up by 11% to US$46.63 billion while shareholders’ funds increased to US$15.0 billion. Gearing improved to 0.83x from 0.85x in FY2012.

    dividendS The Board has recommended a fi nal dividend of S$0.055 per share for FY2013. Including the interim dividend of S$0.025 per share paid in September 2013, the total dividend for FY2013 is

    S$0.08 per share, representing a dividend payout of more than 30% compared to about 20% in FY2012.

    2013 hiGhliGhtS In recent years, the Group has utilised its strong cash fl ows to invest selectively in projects that complement our existing operations and also in new growth markets. These investments have begun to make meaningful contribution to our performance in FY2013.

    Sugar Our Sugar division continued to make good progress during the year, contributing 7% to our profi t before tax, up from 6% in FY2012. Notable developments were:

    • Our acquisition in April 2013 of a 27.5% equity stake in Cosumar S.A., the sole sugar supplier in Morocco and the third largest sugar producer in Africa.

    • The appointment in August 2013 of Wilmar Sugar Pte Ltd, the Group’s sugar trading unit, as Cevital Spa’s exclusive agent and authorised operator for raw sugar supply to Cevital’s two refi neries in Bejaia, Algeria. Cevital is among the largest sugar refi neries globally. This will further strengthen the Group’s merchandising operations.

  • Wilmar international limited AnnuAl RepoRt 2013 3

    • In February 2014, we entered into an agreement to acquire a strategic stake in Mumbai-based Shree Renuka Sugars Limited. This investment, subject to relevant regulatory approvals, will allow the Group to establish a significant presence in India and Brazil, the two most important sugar markets.

    These developments will complement and strengthen our existing sugar business and extend our presence across the key sugar markets of Australia, Indonesia, India, Brazil and Africa. We are confident that our sugar business will continue to grow and contribute significantly to our earnings in future.

    Palm & Laurics We believe that the future of our Palm & Laurics business lies in higher value-added and higher-margin downstream products. We are particularly pleased with the record US$855.7m pretax profit achieved by our Palm & Laurics division in FY2013, not because of the quantum of improvement (11% up from FY2012 pretax profit), but more because of the structural shift in the quality of the earnings, which were achieved in the face of generally low palm prices and critically, through increased contributions from high value-added downstream products.

    FY2013 saw the Group making inroads into the United States. Wilmar Oils & Fats (Stockton), LLC, began processing palm, coconut and palm kernel oils for the California and neighbouring West Coast markets. From mid-2014, the refinery will begin to supply sustainable palm oil certified to the Roundtable on Sustainable Palm Oil (RSPO) standards to cater to the growing demand from major retailers and food brands, many of which have committed to sourcing only sustainable palm oil by 2015.

    Forming partnerships is a win-win strategy that builds efficient operations leveraging Wilmar’s manufacturing capability and our partners’ technical expertise:

    • The Group’s joint venture with Elevance Renewable Sciences, Inc. commenced shipping commercial products, including novel specialty chemicals, to customers from its biorefinery located within our integrated manufacturing complex in Gresik, Indonesia. The biorefinery is the first to harness Elevance’s proprietary metathesis technology, which is capable of delivering innovative products that enhance performance and reduce environmental impact.

    • The Global Amines Company Pte Ltd, a joint venture between Wilmar and Clariant International Ltd, started production in Lianyungang, China in February 2013. The joint

    venture company positions itself as the first fully integrated and competitive player along the value chain from renewable materials to selected amine derivatives. With production plants in Germany, China, Japan and Brazil, the company is seeing a steady growth in sales with its product offering of primary amines, tertiary amines and amine derivatives.

    • Since the Group’s foray into the Chinese oleochemicals market in 2004, the business has been on a solid growth trajectory. Further leveraging our competitive advantage in raw materials, Wilmar inked an agreement with Kemira Oyj in November 2013 to form two 50:50 joint venture entities for the manufacture of Alkyl Ketene Dimer (AKD) Wax in China. Wilmar will benefit from the collaboration as stearic acid is the primary raw material for AKD production, and Wilmar is a global leader in stearic acid production.

    In line with the rapid growth of the specialty fats business in the last few years, the Group expanded processing capacity in China, Indonesia and India. We intend to continuously enhance the margin of our specialty fats business through the development of higher-end products.

    Oilseeds & Grains Flour and rice milling, although relatively new businesses, show good long-term potential and have obvious synergies with our edible oils businesses. Leveraging our existing business infrastructure as well as trusted brand name, our flour and rice businesses have made good progress in FY2013. Not only do these businesses continue to gain scale and market share, they are gaining a reputation amongst our customers for high quality and good value. In FY2013, two new flour mills were commissioned in China, and another two new flour mills are under construction in Vietnam and Indonesia.

    Consumer Products In China, our aim is to build on our strong manufacturing and distribution facilities and the “Arawana” brand - our leading consumer pack edible oils brand in China, to also become a leader in consumer pack flour and rice, as well as other higher- margin food consumer products. We are becoming increasingly recognised as a producer of high-quality food products which use edible oils, rice, flour and soybeans as their key ingredients.

    Our joint venture with Kellogg Company in China has made good progress since the start of our collaboration in 2012. Kellogg’s premium bre