Olam reports high sales and 65.3% growth in profits

SINGAPORE – Olam International has reaped well from high sales volume, 56.3% up boosted by highest growth in grains, edible oils, rice and dairy.

Its profits grew 65.3% year-on-year from US$351.31m to US$580.74m in 2017 while in the Q4 2017, profits also showed growth and rose 159.3% to US$265.15million.

According to Executive Director and Group COO, A. Shekhar, higher profits were generated as a result of strong cash flows delivered by lowering capital expenditures and optimising working capital.

The company also gained from the sale of its sugar refining business in Indonesia and edible-nut farms in the U.S., and lower depreciation, amortization and net finance charges.

However, Olam registered lower financial leveraging at 1.46 times compared to 1.99 times as at December 31, 2016 due to lower net debt arising from the reduction in working capital, lower gross capital expenditure, divestments and the conversion of warrants.

Food staples and packaged foods recorded highest revenue growth by 59.8% to US$9.8 billion and good profits as a result of better results from grains milling, animal feed, Rice and Dairy, which offset lower contribution from Edible Oils, Sugar and Packaged Foods.

Increase in general revenue was also realised by improved performance from Edible nuts, spices & vegetable ingredients; Confectionery & beverage ingredients and Industrial raw materials, Ag logistics & infrastructure.

This was driven by higher volumes, higher almond and cashew prices, offsetting the impact from tougher market conditions and short crops and lower coffee and cocoa prices.

Olam said that although it expects macro-economic uncertainties, its diversified and well-balanced portfolio provides a base to overcome at both the global economy and commodity markets.

To ensure growth and deliver positive free cash flow, the company will focus on its Strategic Plan and Sustainability program.

“These results were achieved on a combination of pursuing growth in prioritised platforms, working to turn around underperforming businesses and nurturing gestating assets,” said Sunny Verghese, Co-Founder & Group CEO.

“While we may not be immune to near-term uncertainties for some agri- commodities, we believe we can continue to generate long-term, sustainable value for our stakeholders.

This will involve not only executing on our Strategic Plan but crucially pursuing value in an environmentally and socially responsible way.”

Olam recommended a final dividend of four Singapore cents a share that lifted total annual dividend at 7.5 cents a share for 2017.

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