When someone shares with you something of value, you have an obligation to share it with others.
Monday, 10 November 2008
Picking the right partner in overseas ventures pays off for Wilmar
Singapore’s Wilmar International is a truly international conglomerate, operating throughout the palm oil spectrum, from plantation to refining and consumer products.
Picking the right partner in overseas ventures pays off for Wilmar
By CHEW XIANG 10 November 2008
Singapore’s Wilmar International is a truly international conglomerate, operating throughout the palm oil spectrum, from plantation to refining and consumer products.
Its ‘largest in’ list makes for compelling reading: it’s the world’s largest processor and merchandiser of palm and lauric oils and largest manufacturer of palm biodiesel; in Indonesia and Malaysia it’s one of the biggest plantation companies; in China it owns the leading consumer cooking oil brand; and in India it’s a leading producer of consumer pack edible oils.
Further afield, it’s the largest edible oils refiner in Ukraine and the leading importer of edible oils into East and South Africa.
In total, it has 160 processing plants and employs 70,000 people in more than 20 countries, focusing mainly on Indonesia, Malaysia, China, India and Europe. Its products can be found in more than 50 countries. For 2007, it recorded overseas revenue of $24.5 billion - up 190 per cent from $8.4 billion in 2006, according to the recently released Singapore International 100 ranking results.
Chief financial officer Francis Heng says: ‘Wilmar continues to build infrastructure in existing and new markets to improve our capability to supply our products to these markets at the most competitive cost.’
Its traditional focus has been countries in Asia, but it is also venturing further afield, with recent investments in Russia, Ukraine and Africa.
In Africa, it has tied up with another Singapore-listed company, agriculture supply chain operator Olam International. They formed a joint venture company to invest in integrated palm oil, natural rubber and sugar assets there. In Russia, it has a joint venture with Nizhny Novgorod Fats and Oils Group and Delta Exports.
Most recently, Wilmar has tried to capitalise on China’s emerging gas sector by investing US$36 million for a 15 per cent stake in Fortune Gas Investments Holdings, a holding company for London-listed Fortune Oil’s gas business.
‘Wilmar’s overseas expansion strategy in places where we lack first-hand knowledge is to establish joint ventures with experienced local partners,’ said Mr. Heng. ‘These partners provide local business expertise in management, merchandising and distribution. This has proven to be a successful strategy when entering new markets such as India.’
While poor economic conditions in recent months may hurt the company, Wilmar is adamant that crises are a time for growth. Chief executive officer Kuok Khoon Hong said in August: ‘We have the resources and financial strength to seize attractive new opportunities while continuing to pursue existing strategies.’
Mr. Kuok said then that ‘we’re building a new refinery in Germany and also planning a new one in Spain. In Russia, we’re going into crushing and refining, and also planning a few more plants in some still confidential locations’.
Its diversified earnings base also renders it less vulnerable to abrupt swings in crude palm oil prices, a factor that has hurt many other pure play plantation stocks.
UOB Kay Hian, a broking house, said in September that it ‘prefers Wilmar among the big-cap plantation stocks in the region given its low correlation with CPO prices. Wilmar has the lowest correlation with CPO prices due to its diversified earnings base. For every 10 per cent decline in CPO prices, Wilmar’s earnings will fall by 3 per cent’.
Plantations and palm oil mills contributed just 18 per cent to Wilmar’s first-half profit before interest and tax this year, according to a CIMB research note. ‘For the other major palm oil planters, upstream plantations account for more than half of their earnings,’ CIMB said.
Its palm-oil refining business in Malaysia and Indonesia accounts for another 29 per cent of the group’s earnings, while its soybean crushing business and consumer-pack market in China are further drivers of earnings.
Says Mr. Heng: ‘Wilmar’s main strength is the ability to find good partners and build a good management team in each of its overseas operations.’
1 comment:
Picking the right partner in overseas ventures pays off for Wilmar
By CHEW XIANG
10 November 2008
Singapore’s Wilmar International is a truly international conglomerate, operating throughout the palm oil spectrum, from plantation to refining and consumer products.
Its ‘largest in’ list makes for compelling reading: it’s the world’s largest processor and merchandiser of palm and lauric oils and largest manufacturer of palm biodiesel; in Indonesia and Malaysia it’s one of the biggest plantation companies; in China it owns the leading consumer cooking oil brand; and in India it’s a leading producer of consumer pack edible oils.
Further afield, it’s the largest edible oils refiner in Ukraine and the leading importer of edible oils into East and South Africa.
In total, it has 160 processing plants and employs 70,000 people in more than 20 countries, focusing mainly on Indonesia, Malaysia, China, India and Europe. Its products can be found in more than 50 countries. For 2007, it recorded overseas revenue of $24.5 billion - up 190 per cent from $8.4 billion in 2006, according to the recently released Singapore International 100 ranking results.
Chief financial officer Francis Heng says: ‘Wilmar continues to build infrastructure in existing and new markets to improve our capability to supply our products to these markets at the most competitive cost.’
Its traditional focus has been countries in Asia, but it is also venturing further afield, with recent investments in Russia, Ukraine and Africa.
In Africa, it has tied up with another Singapore-listed company, agriculture supply chain operator Olam International. They formed a joint venture company to invest in integrated palm oil, natural rubber and sugar assets there. In Russia, it has a joint venture with Nizhny Novgorod Fats and Oils Group and Delta Exports.
Most recently, Wilmar has tried to capitalise on China’s emerging gas sector by investing US$36 million for a 15 per cent stake in Fortune Gas Investments Holdings, a holding company for London-listed Fortune Oil’s gas business.
‘Wilmar’s overseas expansion strategy in places where we lack first-hand knowledge is to establish joint ventures with experienced local partners,’ said Mr. Heng. ‘These partners provide local business expertise in management, merchandising and distribution. This has proven to be a successful strategy when entering new markets such as India.’
While poor economic conditions in recent months may hurt the company, Wilmar is adamant that crises are a time for growth. Chief executive officer Kuok Khoon Hong said in August: ‘We have the resources and financial strength to seize attractive new opportunities while continuing to pursue existing strategies.’
Mr. Kuok said then that ‘we’re building a new refinery in Germany and also planning a new one in Spain. In Russia, we’re going into crushing and refining, and also planning a few more plants in some still confidential locations’.
Its diversified earnings base also renders it less vulnerable to abrupt swings in crude palm oil prices, a factor that has hurt many other pure play plantation stocks.
UOB Kay Hian, a broking house, said in September that it ‘prefers Wilmar among the big-cap plantation stocks in the region given its low correlation with CPO prices. Wilmar has the lowest correlation with CPO prices due to its diversified earnings base. For every 10 per cent decline in CPO prices, Wilmar’s earnings will fall by 3 per cent’.
Plantations and palm oil mills contributed just 18 per cent to Wilmar’s first-half profit before interest and tax this year, according to a CIMB research note. ‘For the other major palm oil planters, upstream plantations account for more than half of their earnings,’ CIMB said.
Its palm-oil refining business in Malaysia and Indonesia accounts for another 29 per cent of the group’s earnings, while its soybean crushing business and consumer-pack market in China are further drivers of earnings.
Says Mr. Heng: ‘Wilmar’s main strength is the ability to find good partners and build a good management team in each of its overseas operations.’
Post a Comment