OIam International has swung to profitability in the 2HFY2021 ended December with earnings of $264.9 million, compared to a loss of $87.0 million in the corresponding period the year before.
The higher earnings were due to improved operating profit and lower exceptional losses, says the group in its statement on Feb 28.
Earnings for the FY2021 surged 179.4% y-o-y to $686.4 million, from FY2020’s earnings of $245.7 million, making it a record high for the group.
This was due to the strong operating profit growth seen throughout the year as well as lower exceptional losses due to the group’s reorganisation.
Earnings per share (EPS) for the 2HFY2021 stood at 6.65 cents from loss per share of 3.51 cents. EPS for the FY2021 stood at 18.26 cents, from the 5.73 cents reported in the year before.
Revenue from the sale of goods and services in the 2HFY2021 rose 29.0% y-o-y to $24.17 billion, while other income rose 10.5% y-o-y to $36.1 million.
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During the half-year period, cost of goods sold increased 28.5% y-o-y to $21.9 billion.
Profit before tax reversed into the black at $307.5 million, from loss before tax of $102.0 million.
EBITDA for the 2HFY2021 rose 20.9% y-o-y to $781.0 million.
As at end-December, cash and cash equivalents stood at $4.16 billion.
Olam’s board of directors have declared a second interim dividend of 4.5 cents per share for 2021, bringing the total dividend for FY2021 to 8.5 cents a share, up from FY2020’s 7.5 cents a share.
“We had a banner year in 2021 with our strongest reported and operational PATMI since Olam was founded despite the continued impacts from Covid-19. This reflects the continued strength and differentiation of our business model. The benefits of focus through the re-organisation exercise has yielded strong growth momentum for both ofi and Olam Agri, and they are now well poised for their next phase of growth,” says Olam co-founder and CEO Sunny Verghese.
In its Feb 28 announcement, Olam announced that its shareholders have approved the scheme arrangement to implement the restructuring of the group. The arrangement expected to take place on March 15.
The restructuring was announced on Jan 20, 2020, where the group announced that it will reorganise its business into two new distinct operating groups. One will focus on food ingredients, while the other will focus on the group’s global agri-business.
Olam Food Ingredients (OFI) will also aim to list in the second quarter of 2022, with a concurrent primary listing in London and a secondary listing in Singapore.
In addition, the group is exploring “various strategic options” to maximise the value of Olam Agri, including the potential introduction of strategic minority partners. It is also considering the potential IPO and demerger of Olam Agri.
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“We are grateful to our shareholders who have approved the scheme of arrangement, giving us the overwhelming mandate to execute on our re-organisation Plan. OFI is set to list in both London and Singapore in 2Q2022, giving Olam’s investors a unique opportunity to be part of OFI's transformation while continuing to benefit from being invested in the rest of the Olam Group of businesses, including Olam Agri,” he adds.
He continues that the group continues to be “optimistic” on the prospects for all three operating groups as they are “right at the centre of key global food and consumer trends”.
“For OFI, [they] include the growing demand for more plant-based, on-trend, natural, healthy and sustainably sourced food ingredients, for Olam Agri the growing demand for food, feed and fibre from a growing population, the transition of dietary habits from cereals to more protein-based diets and growing concern for food security, and for OIL the growing market opportunities for digital and sustainability solutions to transform the food and agri-business sector.”
Olam Group CFO N Muthukumar says the group’s balance sheet remains strong in FY2021 even as it has committed “significant capital for transformational acquisitions such as Olde Thompson and for several organic growth initiatives”.
“With the legal separation of the new operating groups now complete, we are working closely with each of them to find the most optimal capital structure so they can meet their operational needs and deliver profitable growth,” he adds.
“As we progress with our re-organisation, we continue to diversify our funding sources and explore innovative financing solutions, such as a unique two-tier AtSource-linked sustainability financing facility aggregating US$1.45 billion ($1.96 billion) of loans, and a US$150 million loan to support our purchase of sustainable cotton under the Better Cotton Initiative.”
Shares in Olam closed 1 cent higher or 0.59% up at $1.71 on Feb 25.
