ADM reduces stake in Wilmar

Global agribusiness giant ADM has reduced its stake in Asian agribusiness Wilmar in order to raise additional capital.

The company said on 23 August that it had completed its secondary block trade of approximately US$550M in ordinary shares in Wilmar, retaining at least a 20% strategic ownership stake.

“Wilmar ­- Asia’s leading agribusiness and packaged food oils company - is a strategic partner and one of ADM’s largest customers,” the company said.

“We have no plans to sell additional Wilmar shares, and look forward to continuing our partnership for years to come,” ADM chairman and chief executive officer Juan Luciano added.

ADM said net proceeds from the sale would be used for general corporate purposes, which might include meeting working capital requirements, funding capital expenditures and possible acquisitions or investments in businesses and assets, and acquiring outstanding shares of ADM common stock as part of its publicly announced stock repurchase programme.

The partnership between the two companies started in the early 1990s when they jointly built a network of soyabean processing operations in China. Since 1994, ADM had been a significant investor in Wilmar.

“Today, Wilmar is a key component of ADM’s strategy in emerging markets, including Asia Pacific; an important trade partner; and co-owner of joint venture Olenex, a major European provider of speciality oils,” ADM said.

Singapore-based Wilmar has assets in soyabean crushing, edible oil refining and packaging, oil palm plantations, palm oil refineries, biodiesel production, speciality fats and oleochemical fatty acids throughout Asia.

In other news, Wilmar announced a 49% surge in first half net profits due to a recovery in Chinese demand following the COVID-19 pandemic, AgriCensus reported on 11 August.

The group’s core net profits had jumped to US$610.9M for the six-month period to June, with revenue for the company 12% higher on the year at US$22.66bn.

Wilmar CEO and chairman Kuok Khoon Hong was quoted as saying the company’s operations had not been ‘significantly impacted’ by the pandemic as the business was mainly focused on the production and distribution of essential food products.

“Further, China, the country where the group has the largest operations, had recovered from this pandemic earlier than most countries,” Hong said, adding that he expected Wilmar to ‘continue to perform well for the rest of the year’.

Over half of the group’s net profits during the period had been generated by its Feed and Industrial Products segment - including its oilseed and palm oil trading operations – which had reported a 105% surge in net profits.

Net profits for the segment had jumped ‘on the back of a strong recovery in oilseeds and grains, as demand in China recovered from the African swine fever outbreak that occurred in the previous year,’ the company was quoted as saying.

“This resulted in strong crush margins and volume during the period.”

The recent surge in palm oil prices had also supported its earnings with palm oil production levels mostly flat on the year at 1.9M tonnes, AgriCensus reported.

Wilmar had also made progress towards the public listing of its Chinese subsidiary, Yihai Kerry Arawana Holdings, on the Shenzhen Stock Exchange and was now waiting for final registration approval from the China Securities Regulatory Commission.

Yikai Kerry’s interests include oilseed crushing, edible oil refining, speciality fats, oleochemicals, and soyabean processing, according to the company’s website.