Olam Group reports improved 2020 revenues despite pandemic conditions
The Olam Group has released its annual results, reporting revenues of $35.8 billion, up 8.6% year-on-year, as the business moved to tackled pandemic conditions, reports Neill Barston.
As the company explained, its key move to separate its activities into two main divisions, global agri (producing $21.5 billion in revenues for last year), and Food Ingredients (delivering $12.5 billion for 2020),including cocoa, had remained on track, and is an integral part of its overall business strategy.
Last year, the group’s operating profit grew 36% to $667.8 million, but taking into account exceptional costs, it reported this figure was in fact down 22% to $245.7 million, largely due to costs associated with its palm oil facilities in Gabon. However, the company noted an improving picture for the second half of the year, in which revenues grew at a higher rate of 9.9% (totalling 18.7 billion for the second half), as its business adapted to global conditions.
There were encouraging signs for its food ingredients division (including cocoa, below), with its 12.5 billion revenue figure for the year representing a 3.3% increase over 2020’s results, driven by volume growth, as well as higher selling prices in its value-added food ingredients and solutions segment.
EBIT results were reported at $771 million for last year for ingredients, which was down 2.8%, attributed to the impact of covid on the company in the first half of 2020. The business noted that 2019 had proved an exceptionally strong year, propelled by the rise of its cocoa operations.
Olam Co-Founder and Group CEO, Sunny Verghese (main image), said “We delivered strong growth in Operational PATMI of 36.0% to S$677.8 million for 2020, reflecting the strength of our operating groups and their constituent businesses, while achieving significant progress in our transformative Re-organisation Plan and we are excited about the sustained value creation potential arising from this re-organisation.
“Our success is underpinned by a radically different sustainability offering, enabled by technology that has strengthened our strategic partnerships with our customers. This performance is also a result of the skill and resourcefulness of our team to capture market opportunities, strong risk management discipline and demonstrated operational capability. “We are particularly pleased to have successfully navigated through Covid-19 thus far by focusing on the safety and well-being of our employees, ensuring food safety to our customers, robust business continuity plans in each of our sites and locations, managing through demand, supply and financial shocks, and partnering with our communities to support them with Covid-19 assistance and resilience measures.
“We are seeing market conditions and sentiments beginning to improve as economies snap back from the worst impacts of Covid-19 in 2020 and we expect this favourable market environment to continue to improve in 2021.”
In addition, the company has made good progress toward the carve-out and separation of OFI and OGA with a dedicated Programme Office and workstreams established and legal advisers appointed. The carve-out and separation of OFI and OGA is estimated to be completed by the end of 2021.
Following a comprehensive strategic review, the Company, together with its joint financial advisers and legal advisers, are planning to list OFI by H1 2022. As part of the re-organisation, the Olam Group is also evaluating a scheme of arrangement which would see Olam’s listing status on the Mainboard of the Singapore Exchange Securities Trading Limited (“SGX-ST”) move to a new holding company.