Olam remains optimistic despite drop in half-year profits
Global ingredients supplier Olam has reported profits of $251 million €217m) for the first half of 2018, down 13.6% year-on-year.
The company, which has Dutch-based cocoa processing facilities and an innovation centre serving the confectionery and bakery sector, also confirmed its second quarter revenues had reduced. Profits for the period were $94m (€81m), down 36% against what it said had been a particularly strong corresponding period for 2017.
Despite the results, the business had forecast a stronger performance for the remainder of the year. The company said its improved outlook was supported by encouraging results from its cocoa processing division, which had compensated for results within its coffee operations.
One of its key developments has been the creation of a new digitally-based supply chain initiative known as AtSource. This has been designed to connect customers directly to the source of supply at every step of a product’s journey, with the aim of increasing traceability and monitoring of progress. Olam said that it intends to have its complete ingredients supply chain operating under this system by 2025.
Co-Founder and group chief executive officer, Sunny Verghese (pictured), commented: “While our first half results were lower than the previous corresponding period, we expect stronger prospects for our business for the rest of the year. Our investments in improving operational excellence (stronger cash, cost and capital focus), launch of AtSource, and digitalisation initiatives have progressed well and will strengthen our business going forward.”
Executive director and group chief operating officer, A. Shekhar also gave a cautious welcome to the results. He added: “Our performance was satisfactory across the business, and must be seen against the particularly strong performance in the same period last year. Our Q2 2018 results were impacted by the continued down cycle in coffee, unprecedented weather conditions in peanut farming in Argentina and lower contribution from edible oils.
“We continue to take proactive action to strengthen our balance sheet. We have significantly reduced net debt, lowered finance costs and diversified our funding sources with initiatives including undertaking Asia’ first sustainability-linked club loan and issuing private placements.”