Olam records lower profits amid trading challenges
Olam International, the global cocoa and ingredients business, has reported a third quarter dip in profits, down 14.2% to $20.7 million and nine month profits down 13.6% to $272.6 million, which it attributed to ongoing challenging trading conditions.
The company said there were difficulties with the coffee market, as well as lower performance from its peanut business and commodity financial services, though it said that investments made had placed it in a strong position for a return to growth.
Olam’s Dutch-based cocoa processing facilities serve sectors including confectionery and bakery markets, and the company believed that structural changes to the business would result in an improved performance.
Among its notable achievements, the business has made inroads with its sustainability programme, with Olam Cocoa’s CEO Gerry Manley and head of cocoa sustainability, Simon Brayn-Smith, taking part in the recent World Cocoa Foundation Partnership Meeting in São Paulo, Brazil, discussing its Living Landscapes Policy.
Co-founder and group CEO, Sunny Verghese commented on the company’s results. He said: “Our Q3 is a seasonally lower quarter which was further impacted by ongoing tough trading conditions in Coffee, lower performance from the peanut business and the Commodity Financial Services business. We further refined our portfolio and made targeted investments during the year, including into digital initiatives and sustainability solutions, that will position us to capture future growth.”
Executive director and group COO, A. Shekhar, added: “Our proactive efforts to strengthen our financial position and capital structure have supported our performance. We reduced our gearing and overall net debt with lower finance costs despite higher interest rates, while continuing to diversify our funding sources. Our focus on capital productivity has resulted in delivering S$602.4 million in Free Cash Flow to Equity for for the first nine months of 2018.”