Kuok Khoon Hong: The palm oil tycoon steering a $15 bn empire

The 76-year-old, Singaporean entrepreneur Kuok Khoon Hong is recognized as the unrivalled leader of the global palm oil trade, earning him the title of “Palm Oil King.”

With over five decades of experience in the industry, he co-founded Wilmar International in 1991. Today, the company is valued at S$21 billion ($15.52 billion) and operates more than 300 subsidiaries, employing 92,000 people.

By the end of 2024, Forbes estimates Khoon Hong’s net worth at $3.8 billion, solidifying his status as one of Singapore’s top entrepreneurs.

Success story

In 1991, Kuok co-founded Wilmar International alongside Martua Sitorus, an Indonesian entrepreneur. The company began with modest capital, initially concentrating on the Indonesian edible oil market by developing oil palm plantations and refineries in Sumatra.

Under Kuok’s leadership, Wilmar expanded into China, India, and Africa, solidifying its position as a major player in the edible oil refining industry.
Wilmar has also been an innovator. In 2019, it became one of the first companies to use satellites to monitor all of its palm oil suppliers, ensuring accountability and making it nearly impossible for suppliers to engage in unsustainable practices.

Today, Wilmar is one of the world’s leading agribusiness conglomerates and the largest palm oil trader globally, serving top food industry clients. Under the leadership of Chairman and CEO Khoon Hong, Wilmar has achieved continued growth.

In 2022, the company produced approximately 1.87 million metric tonnes of palm oil, representing a significant portion of the global production of around 76.63 million metric tonnes that year, according to Statista.

Challenges

In 2022, Wilmar International encountered several challenges, including rising raw material costs, a large inventory balance, and a significant increase in net debt.
Higher commodity prices and the timing of trade purchases contributed to an elevated inventory balance by the end of the year, which in turn led to increased working capital requirements. As a result, net debt rose by US$1.51 billion. Additionally, the company faced scrutiny from Indonesia’s anti-competition watchdog over its restrictions on cooking oil sales.

Despite these obstacles, Wilmar demonstrated resilience, with its diluted earnings per share rising to 38.3 US cents in 2022, up from 29.9 US cents in 2021. The company also saw a 2.8 per cent increase in overall sales volume, reflecting strong performance amid a challenging environment.

Kouk’s business strategies

Vertical integrated business model

According to Ho Kiam Hong, the Chief Financial Officer of Wilmar, very few companies in Asia operate with a vertically integrated business model like Wilmar. Vertical integration refers to a business structure where a company owns and controls its entire supply chain, including manufacturing, supply, distribution, and more. This approach not only streamlines operations but also reduces costs, enhances efficiency, and provides several other strategic advantages.

Strategic brand building

Wilmar is actively strengthening its position in the consumable market by focusing on brand development, recognizing that building strong brands offers greater value than simply operating as a commodity company.

In 2012, Wilmar formed a strategic partnership with Kellogg’s to produce premium breakfast cereals and snacks in China. More recently, the company acquired a 50 per cent stake in Goodman Fielder, which owns well-known brands such as MeadowLea, Praise, White Wings, Pampas, Helga’s, and Wonder White, across Australia, New Zealand, and the Asia Pacific region.

Additionally, Wilmar entered a joint venture with Repi Soap, a company known for its prominent soap and detergent brands like ROL, Ajax, and Largo, expanding its reach into new markets like Ethiopia. This segment, which contributed 11% of profit before tax in 2012, has grown significantly, reaching 18% in 2014.

Business Diversification

Wilmar operates across five key business segments, each of which is a market leader in its respective field. For instance, Wilmar manages oil palm plantations spanning approximately 240,000 hectares, an area four times the size of Singapore.

The company holds a dominant market share in several regions, with 45 per cent in consumer pack oil in China, 35 per cent in Indonesia, 20 per cent in India, 55 per cent in Vietnam, and 20 per cent in Bangladesh.

In 2010, Wilmar ventured into the sugar business, and since then, this division has experienced significant growth. Today, Wilmar is one of the largest raw sugar producers in the region, refining nearly 75 per cent of the sugar consumed in Australia and New Zealand.