Olam Group is guiding for a “materially lower” profit after tax and minority interest (patmi) for its results for the 1HFY2023 ended June.
The group will be releasing its mid-year results after trading hours on Aug 11.
According to the group, the decline is mainly due to the “unprecedented” and materially lower crop yield in the group’s almond orchards in Australia. To be sure, the entire almond industry in the country faced a significant and never-before-seen decline in crop yield during the growing season in 2022/2023 compared to the season’s historical yields and expectations.
“The group observed a combination of lower bee activity during pollination (due to disease) and unseasonal cold, wet conditions (due to excessive rain and flooding) through the growing and pre-harvest periods. Based on our agronomy assessments and ongoing studies by the industry, these factors led to an unexpected drop in yield and quality of the 2023 almond crop in Australia,” says Olam.
The yields are expected to be 35% to 40% lower than forecasted. As such, the group is expecting to record a net exceptional one-off, non-recurring charge of US$83 million ($110.2 million) on a post-tax basis.
The final impact for the FY2023 will be determined in the 2HFY2023 after the entire processing and sale of the crop is completed.
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“Based on available agronomy data, overall tree health post the 2023 crop harvest and industry estimates, the orchards are likely to return to their natural yield curve from 2024 onwards,” says Olam.
In addition to the decline in almond crop yield, higher interest costs were also a factor in impacting the group’s 1HFY2023 earnings.
That said, the group is still expecting to remain profitable for the 1HFY2023 and FY2023.
Shares in Olam closed 1 cent higher or 0.72% up at $1.40 on July 26.
