Key business activities
Production of food products, such as cooking oil, sugar, rice, and condiments, are the focal points of Wilmar’s business activity and make up the majority of its gross profit. Its consumer food brands such as Arawana Brand, Fortune, Sania, and Simply, are marketed across the Asia Pacific and African countries. Besides producing consumer food products, Wilmar International is active in the feed and industrial products segment. This includes the production of animal feeds, non-edible palm oil, biodiesel, and oleochemicals.Wilmar is also active in oil palm production and is the leading palm oil company based on marketcapitalization in the world. It also operates its own oil palm plantations, and is among the leading palm oil plantation owners in terms of size. Its plantations are spread across Indonesia, Malaysia, and Africa, with the largest share of the planted area with oil palms found in Indonesia. Its palm oil products are processed and separated into edible palm oil for consumer food production and non-edible palm oil to be used in the biodiesel segment, for example.
Challenges facing Wilmar in the palm oil sector
As one of the world’s largest owners of palm oil plantations, Wilmar International Limited is vulnerable to any volatilities in the palm oil sector. The previous years have seen several challenges to the palm oil industry, namely climate uncertainties and political instabilities affecting the global economy. Extreme weather events such as heavy rains and flooding in Malaysia, the second-largest palm oil producer globally, have affected yields. Furthermore, travel restrictions imposed due to COVID-19 resulted in less migrant labor available to work the palm oil plantations there.While the supply of palm oil could decrease, the demand for the world’s most consumed edible oil is expected to increase and remain strong within the next few years. This is largely caused by concerns over food security, including in the edible oils sector, caused by the Russia-Ukraine war. Despite growing opposition to palm oil among some consumers due to the negative environmental impact of its cultivation, global palm oil consumption continues to rise in the absence of a viable and economical alternative.