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Wilmar International share price climbs: highest dividend sum since 2006

The agribusiness group has declared its highest dividend payout to investors since going public, on the back of a strong Q4 FY2019.

Source: Bloomberg

Share price of Singapore-based agriculture and food manufacturer Wilmar International Limited rose nearly 3.5% on Friday 21 February, a day after the group reported a 120% increase in net profit for its last fiscal quarter of 2019.

Net profit for Q4 up 120%, quarterly revenue up slightly

Wilmar reported a 120% improvement in net profit to US$438.4 million for the quarter ended 31 December 2019, from US$199.4 million the same period a year prior.

The group attributed the jump to strong performances from the Tropical Oils and Oilseeds & Grains segments, coupled with the absence of impairment loss in the Sugar segment.

Full-year net profit across the group grew 15% to US$1.29 billion, led by solid showings from Tropical Oils and Consumer Products. The oilseeds crushing business, though affected by the African swine fever outbreak in China, was able to turn around with better-than-expected results in the second half of 2019.

Revenue increased marginally to US$11.25 billion in 4Q2019 versus US$11.19 billion a year prior, on the back of increased consumer products sales and sugar merchandising activities. This increase was partially offset by lower commodity prices during the quarter.

Full-year revenue and core net profit down 4% and 3.5%

However, for the full 2019 fiscal year, overall revenue declined 4% to US$42.64 billion from FY2018’s US$44.5 billion, despite sales volume reportedly increasing by 4%. The company said that lower commodity prices of 4% was to blame for the eventual annual revenue drop.

The improved net profit – for both Q4 and the full financial year – were also partially offset by lower contributions from the company’s associates and joint ventures. This caused core net profit for the full financial year to decline 3.5% year-on-year to US$1.26 billion.

Excluding gains from non-operating items and changes in fair value of biological assets, core net profit for the quarter improved 23% to US$410.0 million.

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Highest cash dividend declared since listing debut

Earnings per share, on a fully diluted basis, amounted to US$0.204 per share – a 14.6% increase from FY2018.

On the back of this, the Board of Directors has proposed a final one-tier tax exempt dividend of S$0.095 per share.

Including the interim dividend of S$0.03 per share paid in August 2019, the total dividend paid and proposed for FY2019 is S$0.125 per share. This represents the highest cash dividend declared by the group since its listing debut in 2006.

Updates regarding COVID-19 and Yihai Kerry’s China IPO

Wilmar International operates 350 plants in 65 locations in China, of which nine are located in Wuhan – the epicentre of the coronavirus epidemic. Additionally, 60% of the group’s total revenue were attributed to China for the first nine months of FY2019.

Despite this, Chairman and CEO Kuok Khoon Hong said that the group does not ‘expect major impact to our businesses as we are mainly operating in the food products industry’.

He did, however, warn that ‘a prolonged outbreak of COVID-19 may have a greater impact on our operation’.

The anticipated initial public offering of its China subsidiary Yihai Kerry Arawana Holdings is also currently undergoing the approval process and progressing within the standard time frame, with no significant issues encountered to date, Kuok added.

‘We expect the listing to be approved this year even though it may be slightly delayed by the COVID-19 outbreak,’ said Kuok.

‘We would like to emphasise that as work on the proposed listing is still in progress, shareholders are advised to exercise caution in trading their shares in the company. There is no certainty or assurance as at the date of this announcement that the listing proposal will be carried out.’

As of 1.10PM on 21 February, Wilmar International shares are trading at S$4.17 per share, its highest level in over a month.

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