Olam International reports 16% growth in H1 revenues despite market challenges

SINGAPORE – Olam International has reported a steady operating performance, recording 16% growth in revenues to US$ 11.47 billion in the first half of 2019, from US$9.86 billion recorded in a similar period last year.

The company saw its Earnings Before Interest, Tax, Depreciation, and Amortisation (EBITDA) in the first half grow 14.1% to US$ 554.81 million supported by higher contribution from all segments except industrial raw materials, infrastructure and logistics.

EBITDA in the second quarter also grew by 14.1% to US$252.72 million from US$221.56 million posted in Q2 of 2018 due to higher contribution from all segments except edible nuts and spices, and confectionery and beverage ingredients.

Co-founder and group CEO Sunny Verghese said: “We delivered a steady set of results amid growing political and macroeconomic uncertainties affecting most of our markets.

“We are pleased with the EBITDA growth during the first half of 2019, which reflects the effectiveness of our differentiated and defensible strategy.

The Food Staples and Packaged Foods segment recorded the highest growth in the six months period with revenues climbing 38.0% to US$5.9 billion mainly driven by growth in Grains trading volumes. 

Volumes during the peris increased 40.4% to 19.1 million metric tons compared to 13.6  million metric tons recorded in H1 of 2018.

However, Profit After Tax and Minority Interest (PATMI) in quarter two of 2019 shrunk 34.5% to US$44.26 million which weighed on the half year’s PATMI, declining by 8.5% to US$165.72 million.

Verghese maintained that the company is “making good progress in executing our new Strategic Plan.

“We are investing in several new initiatives to offer differentiated solutions to our existing customers as well as develop new customer segments and channels.

“We also stay focused on streamlining our portfolio by recycling capital and focusing on high-growth businesses.”

In terms of its outlook, the company said that despite political and economic uncertainties are likely to affect global trading conditions in 2019, Olam believes its diversified portfolio provides a resilient platform to navigate the challenges in both the global economy and commodity markets.

Consequently, the business is executing on the four strategic pathways for growth as set out in the 2019-2024 Strategic Plan.

Olam said it will strengthen, streamline and focus its business portfolio, drive margin improvement by enhancing cost and capital efficiency.

The company is also confident that it will generate additional revenue streams by offering differentiated products and services, and explore partnerships and investments in select new engines for growth.

Executive director and Group COO, A. Shekhar added: “We further strengthened our balance sheet during the first half of the year, with improved gearing and free cash flows.

“We are well positioned for the second half of the year as we approach the peak of the procurement season for several of our commodities, with likely increases in working capital deployment.

“We will also stay focused on the divestment of the identified non-core assets as we complete our planned fixed capital investments, including the proposed acquisition of Dangote Flour Mills during this period.”

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