Thursday 29 September 2022

Olam 1H earnings marginally up, steady performance for ofi

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SINGAPORE – Olam Group reported today (Aug 12) a net profit of S$429.1 million for the first half of the fiscal year ended June 2022, up a marginal 1.8 per cent from S$421.5 million in H1 2021 as higher finance costs partly offset strong Ebit (earnings before interest and tax) growth for the period.

This is attributed to the strong EBIT growth partly offset by higher finance costs amid a high interest rate environment, taxes and higher one-off exceptional charges related to the group’s reorganisation. Excluding exceptional items, operational PATMI was up 8.2% to S$472.5 million.

Olam Agri:

  • Sustained strong growth in Olam Agri, main driver for overall Group performance
  • Strong broad-based top-line, margin and bottom-line growth across all segments with 26.2% revenue, 49.4% operating profit (EBIT), 48.7% margin (EBIT per tonne) growth year-on-year
  • Crystallised value through 35.4% private placement with strategic investor SALIC2 , raising US$1.24 billion and valuing Olam Agri at a US$3.5 billion equity valuation
  • Transaction with SALIC is expected to complete by end-2022, which will catalyse further growth

ofi:

  • Steady H1 2022 performance amidst challenging macro environment and cost pressures with improved momentum going into H2 2022
  • EBIT decreased 11.8% against a very strong comparative prior period, impacted by increased depreciation and amortisation from new investments and inflationary pressures, especially the sudden surge in energy costs.
  • Well-positioned for 2022 as the revised sales pricing and margin recovery gathers pace in H2 2022
  • Remain committed and fully prepared to pursue an IPO and demerger pending favourable market conditions, with a primary listing on the premium segment of LSE and a concurrent listing in Singapore

Remaining Olam Group:

  • Continued progress in divesting de-prioritised assets and monetising gestating assets
  • Exploring strategic options for Olam Ventures and Olam Technology and Business Services (OTBS)

Olam Co-Founder and Group CEO, Sunny Verghese, said:“Our strong operating performance in H1 2022 in a highly volatile geopolitical and macroeconomic environment continues to validate our strategy and the effectiveness of our Re-organisation.

“We remain committed and fully prepared to pursue an ofi IPO and demerger pending favourable market conditions, with a primary listing on the premium segment of LSE and a concurrent listing in Singapore. Our strategic partnership with SALIC expected to close by the end of the year will further catalyse Olam Agri’s growth. We are exploring a sale of additional 10% stake in Olam Agri to potential investors and/or prepare Olam Agri for an IPO and demerger based on market conditions.”

CEO of ofi, A. Shekhar said:“We are pleased with the steady first-half performance, which must be seen in the context of a very strong H1 2021 and which is after absorbing the sudden surge in input costs and increased depreciation. We are encouraged by the broad-based support from our customers for appropriate revisions in pricing against these cost increases, which is a further validation of their confidence in our ability to deliver surety of supply and cost competitiveness even in this challenging environment. It also demonstrates the strength of the integrated platforms and the resilience of the portfolio.

“We continue to make disciplined investments across our portfolio and have recently acquired two businesses to support our private label thrust: Club Coffee – one of Canada’s largest roasters and packaging solutions providers to the ‘At Home’ segment; and Märsch – one of Europe’s leading private label nuts manufacturers. Our on-trend ingredients portfolio, the integrated global network, and ability to service large, attractive and growing end-use categories, makes us a compelling investment case for anyone looking to tap into growing global demand for food & beverages that are healthy, tasty and sustainable.”

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