Olam full year profits jumps 36% even as it makes significant progress in business re-organisation

SINGAPORE – leading food and agri-business company Olam International Limited (OIL), has reported a 36% jump in Profit after Tax and Minority Interests for the full year ending December 2020.

This is despite of the company operating during a difficult work environment occasioned by the COVID-19 pandemic.

During the year, Olam also reported that it had made significant progress in reorganization of its businesses.

According to a statement from Olam, the reorganization process will create two new coherent operating groups that are well-positioned for further growth.

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Creation of two distinct units

As a result of the reorganization, Olam will in future operate in two distinct units namely, Olam Food Ingredients (“OFI”) and Olam Global Agri (“OGA”).

Olam says it has made good progress toward the carve-out and separation of OFI and OGA with a dedicated Programme Office and workstreams established and legal advisers appointed.

The carve-out and separation of OFI and OGA is estimated to be completed by the end of 2021.

After the de-merger, Olam has planned IPO of OFI before the end of H1 2022.

Olam Co-Founder and Group CEO, Sunny Verghese said: “OFI is a truly global business and its independent listing is a critical first step in unlocking its long-term value”.

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The company’s Operational Profit After Tax and Minimal Interests (PATMI) reached S$677.8 million (about US$508.92 million), a 36% jump compared to the year prior.

In parallel, the Company said that it will continue to explore similar strategic options for maximising the value of OGA within the Olam Group.

Olam Group is also evaluating a scheme of arrangement which would see Olam’s listing status on the Mainboard of the Singapore Exchange Securities Trading Limited (“SGX-ST”) move to a new holding company.

“As we enter the second year of our Re-organisation Plan, we will execute a cost transformation and capital efficiency programme for each new operating group to serve their respective needs, drive profitable growth and improve our returns, ” Olam Group CFO, N Muthukumar said.

Olam’s 2020 robust performance amid the pandemic

Despite of the pandemic, Olam’s revenue increased 8.6% YoY with its newly created division: Olam Global Agri contributing 60.1% of total Group revenue.

Olam Food Ingredients contributed 35.0%, and OIL 4.9% respectively.

The company’s Operational Profit After Tax and Minimal Interests (PATMI) reached S$677.8 million (about US$508.92 million), a 36% jump compared to the year prior.

However, due to net exceptional items, Olam’s reported PATMI was down 22.3% to S$245.7 million (about US$184 million).

For the second half, the company’s activities recovered from COVID-19 leading to a 9% year-on year (YoY) increased in revenue.

Operational PATMI for H2 2020 grew 90.1% to S$475.7 million (about US$357.60 million).

Commenting on the results, Olam Group Executive Director and CEO of OFI, A. Shekhar said: “Our resilient all-round performance despite the pandemic is very encouraging and the positive trajectory of growth in the second half of the year gives us every reason to be optimistic about 2021 and beyond.”

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