Olam profit grows despite 10.5% drop in revenue for confectionery and beverage

SINGAPORE – The global agribusiness company Olam International, has reported profit growth in the 2018 first quarter results despite 10.5% drop in revenue for its confectionery and beverage segments on both lower volumes and prices.

Olam reported US$274.18 million in EBITDA lower than that of Q1 2017 which stood at US$296.9 million.

During the quarter strong results were boosted by improvement in net gearing, in prioritised platforms, completion of planned divestments and continued working capital optimisation, said Olam.

The company said it had executed its planned investments and divestments, reduced financing costs and diversified our funding mix with ground-breaking initiatives, including Asia’s first sustainability-linked club loan.

Profit After Tax and Minority Interest (PATMI) was up 9.8% to US$117.6 million while operational PATMI rose 13.0% to US$121.1 million enabled by reduced net finance costs and lower taxation.

Net gearing as at March 31, 2018, was lower at 1.49 times compared to 1.98 times as at March 31, 2017, due to lower net debt from the reduction in working capital, lower gross capital expenditure, divestments and the conversion of warrants into equity.

“We continued to deliver earnings growth and position ourselves for the future, including the recent launch of AtSource, which enables us to turn sustainability into a key business driver for transforming agricultural supply chains,” said Co-Founder & Group CEO, Sunny Verghese.

“Even as we successfully execute on our 2016-2018 Strategic Plan, we will be embarking on our next Strategic Plan exercise which will see us evolve all the elements of Olam 2.0 and lead the industry’s digital disruption and transformation.”

Reduced volumes year-on-year in peanuts heavily weighed down the Edible Nuts, Spices & Vegetable Ingredients category whose revenue dropped 4% to US$656.6 million.

While cocoa recorded improved performance, coffee performance in the period was lower than the previous year the same period impacting the segment’s (Confectionery & Beverage Ingredients) EBITDA.

Revenue for the Food Staples & Packaged Foods increased 34% to US$1.93 billion mainly on higher trading volumes in Grains.

In 2018 Olam plans to pursue profitable growth while improving cost efficiency and capital productivity, at the same time delivering on its 2016-2018 Strategic Plan.

Growth for its diversified portfolio would be coupled with a sustainability drive to give it a resilient platform to navigate through challenges given political and economic uncertainties in the global economy and commodity markets.

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