Olam reports 7.1% growth in half year revenue despite COVID-19

SINGAPORE – Global food and agri-business, Olam Group, has reported strong results for the first half of 2020 and highlighted it made good progress on its Strategic Plan (2019-2024) and Re-organisation Plan announced in January 2020.

Olam Group has been re-organised into i.e. Olam Food Ingredients (OFI), Olam Global Agri (OGA) and Olam International Limited (OIL), and the company highlighted that it is reporting against the newly formed operating groups for the first time.

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The group’s revenue in the half year period increased by 7.1% to S$17.1 billion (US$12.4bn) with OGA contributed 58.9% of total Group revenue, OFI 36.1%, and OIL 5.0%.

Olam Food Ingredients (OFI), offering natural and value‑added food ingredients, reported strong top-line growth with revenue up 8.8% to S$6.2 billion (US$4.5m), mainly driven by volume growth as well as higher average selling prices.

Olam Global Agri (OGA), reported revenue rise of 8.4% to S$10.1 billion (US$7.3bn), mainly driven by higher volumes as well as higher prices in food staples including Grains, Rice and Edible Oils.

Olam International Limited (OIL), as parent company of OFI and OGA, OIL plays a key role to unlock the full value of the Olam Group by providing active stewardship to the new operating groups, responsibly divesting the de-prioritised businesses and assets, nurturing gestating businesses to full potential, incubating new engines for future growth, developing key cross cutting initiatives, and providing shared services to the new operating groups.

OIL reported lower revenue of 14.6% to S$849.3 million (US$619.1m) with the closure of the Sugar, Rubber and Fertiliser trading desks, the Fundamental Fund and the Wood Products business in Latin America.

The groups Profit After Tax and Minority Interests (PATMI) grew 44.4% to S$332.7 million (US$242.5m) due to a net exceptional gain of S$130.6 million from the divestments of the remaining 50.0% stake in Far East Agri and the partial stake sale of ARISE P&L, offset partially by one-off exit and closure costs of other de-prioritised assets that were divested or shut down.

Its Earnings Before Interest and Taxes (EBIT) was down 18.8% due to lower contribution from OFI which in turn was due to lower contribution from Almonds, Hazelnuts and Cocoa processing.

OFI contributed to 62.1% of total Group EBIT, OGA 54.0%, and OIL 16.1%.

The group witnessed strong cash flow generation with Free cash flow to equity (FCFE) of S$826.9 million (US$602.7m) as the Group maintained strong discipline of its cash flows.

The company indicated that following the COVID-19 pandemic, it is focused on delivering three key priority areas in 2020 i.e. successfully navigate through the Covid-19 pandemic and emerge stronger; execute its Strategic Plan (2019-24) and deliver its strategic and financial goals for 2020; and deliver on its Re-organisation Plan that it announced in January this year.

Olam Co-Founder and Group CEO, Sunny Verghese said, “I am pleased that we have done very well against all three objectives and are seeing growing benefits flow to both our financial performance and our competitive position.

Our resilient performance amid Covid-19 is a testament to the strength of our diversified portfolio, our differentiated strategy, our committed, dedicated teams, and the unique Olam spirit and culture.”

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