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Olam Group reports robust 2020 performance, with 36% growth in Operational Patmi to S$678m

OFI Olam

SINGAPORE – Global food and agri-business, Olam Group, today reported a robust 2020 performance amid the pandemic, with 36.0% growth in Operational PATMI to S$677.8 million and solid progress on its Re-organisation Plan, announced in January 2020. In H2 2020, revenue increased 9.9% year-on year (YoY). Operational PATMI grew 90.1% to S$475.7 million. However, due to one-off exceptional items, reported PATMI was negative at S$87.0 million. EBIT increased 20.6% to S$645.8 million with both OFI and OGA contributing to the growth

FY Financial Performance

  • Revenue increased 8.6% YoY. OGA contributed 60.1% of total Group revenue, OFI 35.0%, and OIL 4.9% respectively.
  • Operational PATMI grew 36.0% to S$677.8 million. However, due to net exceptional items, reported PATMI was down 22.3% to S$245.7 million
  • Exceptional items include the one-off and non-cash impairment charge of S$483.9 million on our investment in OPG; partly offset by gains from divestments of de-prioritised assets.
  • EBIT increased 1.2% to S$1.1 billion as the growth in contribution from OGA was offset by reduced contribution from OIL: OFI’s results were resilient and contributed to 72.1%of total Group EBIT, OGA contributed 43.2% share, and OIL -15.3%.
  • FCFE negative at S$592.2 million on increased deployment of working capital due to higher volumes as well as higher commodity prices
  • Net gearing increased to 1.72 times with an adjusted gearing of 0.63 times net of readily marketable inventory and secured receivables.

Olam Food Ingredients

Olam Food Ingredients (OFI) consists of the Cocoa, Coffee, Nuts, Spices and Dairy businesses. It is made up of two segments – Ingredient Sourcing & Supply Chain, and Value-added Food Ingredients & Solutions.

  • Revenue was up 3.3% to S$12.5 billion, mainly driven by volume growth as well as higher average selling prices in the Value-added Food Ingredients & Solutions segment.
  • EBIT growth was strong at 43.3% in H2 2020. Although EBIT for 2020 was down 2.8% to S$771.1 million because of the Covid-19 impact in H1 2020 on Cocoa processing and the Australian Almond business, the overall results represent a strong, resilient performance in 2020 considering 2019 was an exceptional year when the Cocoa business had a stellar performance. All other businesses like Coffee, Dairy, Spices and other Nuts delivered better earnings than the prior year.

Olam Group Executive Director and CEO of OFI1, A. Shekhar said: “2020 was an exciting first year for OFI. We bounced back from the impact of Covid-19 in the first half, to deliver very strong earnings growth in second half. 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.

“We are thankful for the strong support from our customers with whom we worked very closely to manage the many supply chain challenges during the year, as well as co-creating innovative and sustainable solutions that enable them to tap into ever-evolving consumer preferences.

“We are making disciplined and deliberate investments to back our refreshed strategy as demonstrated by the recent acquisition of the US-based chile pepper business, as well substantive greenfield commitments behind a soluble coffee manufacturing plant in Brazil and a Dairy processing plant in New Zealand. These will position us for delivering sustained growth as we look to carve out OFI and plan for an IPO and concurrent de-merger in the first half of 2022.”