Wilmar 2011

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  • Wilmar international limitedAnnuAl RepoRt 2011

  • Contents1 Corporate Profile

    2 Chairmans Statement

    4 Global Presence

    6 Financial Highlights

    8 Board of Directors

    14 Key Management Team

    15 Corporate Information

    18 Operations Review

    34 Corporate Social Responsibility

    42 Human Capital Management

    44 Information Technology

    46 Risk Management

    48 Corporate Governance

    57 Financial Report

  • Corporateprofile

    Wilmar International Limited, founded in 1991 and headquartered in Singapore, is today Asias leading agribusiness group. Wilmar is ranked amongst the largest listed companies by market capitalisation on the Singapore Exchange.

    Wilmars business activities include oil palm cultivation, oilseeds crushing, edible oils refining, sugar milling and refining, specialty fats, oleochemicals, biodiesel and fertilisers manufacturing and grains processing. At the core of Wilmars 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 300 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 over 90,000 people.

    Wilmars 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.

    1Wilmar international limited annUal rePort 2011 sustainable growth

  • Chairmansstatement

    fY2011 in reVieW FY2011 presented an economic landscape of uncertainty with the European sovereign debt crisis and Chinas slowing growth weighing heavily on business and consumer confidence. Amidst challenging conditions, the Group continued to be profitable, recording US$1.60 billion net profit in FY2011 versus US$1.32 billion in FY2010. Excluding non-operating items and net gains from changes in the fair value of biological assets, the Groups net profit increased 44% to US$1.52 billion in FY2011. Total revenue increased 47% to US$44.71 billion versus US$30.38 billion in FY2010 on the back of higher sales volume, particularly from Oilseeds & Grains and Consumer Products, and contribution from the new Sugar segment.

    Earnings per share grew 21% to 25.0 US cents in FY2011 as compared to 20.7 US cents in FY2010. The Groups balance sheet remained strong, with total assets up by 16% to US$39.64 billion while shareholders funds increased to US$13.37 billion. Gearing remained healthy despite a marginal increase to 0.97x, from 0.90x in FY2010, arising from an increase in net loans and borrowings.

    diVidendsThe Board has recommended a final dividend of S$0.031 per share for FY2011. Including the interim dividend of S$0.03 per share paid in September 2011, the total dividend for FY2011 is S$0.061 per share, representing a dividend payout of about 20%.

    major business deVelopmentsDuring the year, we continued to invest in our businesses to drive growth, through capacity expansion and new investments in key markets.

    Palm & lauricsIn May, the Group announced a partnership with New Britain Palm Oil Limited (NBPOL) to form an integrated supply chain and joint marketing arrangement for supplying Continental Europe with fully traceable and segregated sustainable palm oil from NBPOLs Roundtable on Sustainable Palm Oil (RSPO) certified plantations. The palm oil supply will be available from Wilmars refinery in Brake, Germany, from mid-2012. This collaboration ensures that our Brake refinery is able to offer a wide range of products and blends of certified sustainable palm oil for the European food market.

    Also in May, we inked a Memorandum of Understanding with Huntsman Corporation to build a state-of-the-art natural alcohol plant at Huntsmans chemical site in Rotterdam, The Netherlands. The facility, to be owned and operated by Wilmar, will strengthen our foothold in Europe when it commences operations in 2013.

    In November, the Group announced a partnership with Gavilon, LLC to construct an edible oil processing, transloading and storage facility in Stockton, California. The cooperation will allow Wilmar to leverage on Gavilons marketing and distribution capabilities while the facility, to be operational by the third quarter of 2013, will reap significant supply chain benefits for customers in the California and neighbouring West Coast markets.

    During the year, we continued our expansion in oleochemicals by adding new capacities in Indonesia and China and building a new plant in India.

    Looking ahead, the Group will continue to take advantage of favourable government incentives for downstream processing by increasing its refining capacity in Indonesia by 50%.

    oilseeds & grainsFurther strengthening our position as one of the largest wheat and rice millers in China, we completed another two flour mills and two rice mills in 2011. The Group also acquired a 20% interest in FFM Berhad which has five flour mills in Malaysia, one each in Vietnam and Indonesia, and one through joint venture in Thailand. In the region, we are expanding our flour milling capacity with the construction of two new mills one through our joint venture with FFM Berhad in Ha Long City, Vietnam, and another by our subsidiary in Gresik, Indonesia.

    Construction of two oilseeds crushing plants, one each in Russia and Ukraine, commenced during the year. When completed in early 2013, each plant will boast an estimated capacity of 1,200 MT per day.

    sugarThe Group further expanded its sugar footprint with the acquisition of Indonesian refinery, PT Duta Sugar International in July and Proserpine Mill in Australia in December. We also acquired several thousand hectares of land in Australia for sugar cultivation to better utilise our milling capacities. Moving forward, we intend to expand our sugar business through acquisitions and greenfield projects.

    Wilmar international limited annUal rePort 2011sustainable growth2

  • africaDuring the year, the Group made good progress with its investments and expansion plans in Africa. Through our wholly-owned subsidiary Wilmar Africa Limited, we acquired a 77% stake in Benso Oil Palm Plantation Limited which is listed on the Ghana Stock Exchange. Through a joint venture with PZ Cussons, we commenced construction of a palm oil refinery in Nigeria. We have also commenced work on developing oil palm plantations in Nigeria and look forward to further expanding our presence in Africa. In South Africa, the Group acquired a 55% interest in two oilseeds crushing plants with refinery and consumer pack facilities.

    sustainabilitY and Corporate soCial responsibilitY Our continued commitment and efforts towards sustainable palm oil were suitably rewarded in 2011 with all of our mills and estates in Malaysia attaining the RSPO certification. The Groups production of certified sustainable palm oil from Indonesia and Malaysia increased to about 520,000 tonnes per annum in 2011.

    Wilmar has always recognised the impact oil palm plantations have on biodiversity. In this regard, several initiatives were taken and accomplished during the year to mitigate our footprint. These included a tripartite Memorandum of Understanding (MoU) with the Borneo Orangutan Survival Foundation (BOSF) and the Governor of Central Kalimantan, Indonesia on the conservation of orang utans and their habitat; a two-year Biodiversity and Agricultural Commodities Programme with the Zoological Society of London; and an Orang Utan and Nature Conservation Education Programme in Indonesia. The Group also aims to develop Best Management Practices that can be applied at a large landscape level with adjacent oil palm plantations.

    The Group continues to support education and healthcare for the needy. At the end of 2011, we have established a total of 25 schools in China and

    improved educational facilities for more than 12,000 rural students. To date, the Group has funded more than 14,000 cataract operations for the elderly and donated 2,500 wheelchairs to the disabled. Since July 2011, we have provided financial aid for over 20 successful prosthetic operations.

    In Singapore, Wilmar continues to advocate higher education through donations and scholarships to, as well as overseas internship programmes with the National University of Singapore, Nanyang Technological University, Singapore Management University, Singapore Institute of Technology and the Lee Kuan Yew School of Public Policy.

    outlooK and prospeCts2012 will be an exciting year as we continue to explore joint ventures and closer collaborations with various parties, acquisitions, expansion of existing capacities and venturing into new countries. With Wilmars healthy balance sheet, improved range of downstream product offerings, strong infrastructure in Asian countries, we are well-positioned to capture emerging markets growth as well as other agri-related expansion opportunities which might arise.

    aCKnoWledGementsOn behalf of the Board, I would like to thank Mr Chua Phuay Hee who retired from the Board and Group on 31 December 2011, for his many years of service and contributions.

    I would also like to convey our appreci