Leading food and agri-business Olam International has posted earnings of $332.7 million for the 1H20 ended June, a 44.4% growth from the earnings of $230.4 million a year ago. The increase is due to a net exceptional gain of $130.6 million from the divestments of the remaining 50% stake in Far East Agri and the partial stake sale of ARISE P&L.
The growth in earnings translates to earnings per share (EPS) of 9.43 cents on a fully diluted basis.
This is the first time the group is reporting its results against its newly formed operating groups, namely Olam Food Ingredients (OFI), Olam Global Agri (OGA), and Olam International Limited (OIL) since the formation of its re-organisation plan announced in January.
Revenue increased 7.1% y-o-y to $17.1 billion. Segmentally, OGA contributed 58.9% to the total group revenue, while OFI and OIL contributed 36.1% and 5.0% ($850 million) respectively.
Revenue for OGA grew 8.4% y-o-y to $10.1 billion mainly driven by higher volumes as well as higher prices in food staples including grains, rice, and edible oils.
OFI’s topline grew 8.8% y-o-y to $6.2 billion mainly due to volume growth and higher average selling prices.
Revenue for OIL fell 14.6% y-o-y to $850 million with the closure of the Sugar, Rubber and Fertiliser trading desks, as well as the Fundamental Fund and the Wood Products business in Latin America.
Earnings before interest and taxes (EBIT) fell 18.8% y-o-y to $423.7 million due to lower contribution from OFI, which was in turn due to lower contribution from Almonds, Hazelnut and Cocoa processing.
“Following the Covid-19 pandemic, we are focused on delivering three key priorities in 2020: i) successfully navigate through the Covid-19 pandemic and emerge stronger; ii) execute our Strategic Plan (2019- 24) and deliver our strategic and financial goals for 2020 and beyond; and iii) deliver on our Re-organisation Plan that we announced in January this year,” says co-founder and CEO Sunny Verghese.
“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… While the year ahead will remain challenging and uncertain with a range of outcomes that could impact demand and supply conditions across geographies, businesses and financial markets, we remain confident in the strength of our business model to emerge stronger from this crisis,” he adds.
The board has declared an interim dividend of 3.5 cents per ordinary share for the period, unchanged from 1H19, which will be paid to shareholders on August 28.
Shares in Olam closed 1 cent higher, or 0.8% up, at $1.32 on August 12.
