Wilmar buys 53.7% stake in Noble’s Indonesia palm venture

Today | 23 February 2013

SINGAPORE — Wilmar International has taken a majority stake in a palm plantation venture in Indonesia’s Papua owned by Noble Group, giving the world’s biggest palm oil supplier a toehold in the province where it also hopes to grow sugar cane.

Wilmar bought a 53.7 per cent stake in a Noble unit that has a majority stake in a company owning 22,953 hectares of land in Papua. Wilmar and Noble will form a joint venture to develop palm plantations there, the two Singapore-listed commodity giants said yesterday. Noble will hold the rest of the equity.

Wilmar and Noble did not disclose financial details of the deal, but based on industry estimates, developing the land into palm oil plantations would cost US$125 million (S$154.7 million) to US$150 million spread over a four- to five-year period.

The deal will allow Noble to split the cost of developing the plantation and benefit from Wilmar’s palm oil know-how, as the latter has about 256,000 hectares of plantations in Indonesia, Malaysia and Africa. Wilmar’s Indonesian plantations are mainly concentrated in Sumatra and Kalimantan.

“Papua is not an easy region. If they can do this, they can move on with their plans to develop sugar cane plantations in Papua,” said a Singapore-based analyst with a global bank who did not wish to be named. Wilmar had previously said it planned to develop sugar cane plantations and set up mills in Papua.

In a separate statement yesterday, Wilmar said its net profit in the fourth quarter ended Dec 31 fell 4.7 per cent from the previous corresponding period to US$476.8 million, weighed down by lower palm oil prices, even as turnover rose 0.9 per cent to US$11.6 billion. For the full year, net profit plunged 21.6 per cent to US$1.26 billion while revenue rose 1.7 per cent to US$45.5 billion.

Despite the results, the company struck an optimistic tone for the long term, citing demand for commodities from emerging markets.

“While uncertainties in the global economy remain, we are cautiously optimistic of our long term prospects due to good economic growth in our main markets of China, India and Indonesia, and the robust business model we have built up over the years,” said Wilmar Chairman and Chief Executive Kuok Khoon Hong.
Original source: Today Online

Post a comment


Email address (optional - if you want a reply)