Olam reports sustained half-year growth for its businesses including cocoa production
The global food and agri-business Olam Group has posted a key upturn in its half-year results, with profits standing up at $421 million for the period, up 26%, for the business, after a major re-organisation of its activities, reports Neill Barston.
During the past two years, the Singapore headquartered company has split its business into distinct divisions, OFI, specialising in food ingredients including key cocoa markets, and Olam Global Agri (OGA), which has seen a period of renewed growth.
As previously reported by Confectionery Production, the company’s enhanced performance follows previous announcement of a five-year growth strategy, unveiling plans for investing S$1.1 billion to strengthen its overall operations.
Half year revenues for the group stood at $22.8 billion, up by 33%, while its overall sales volume grew 11.5% to 22.4 million metric tonnes, with its agriculture business accounting for nearly 90% of those figures.
In its outlook, the company said that despite the ongoing Covid-19 pandemic, it had noted a ‘discernible pick-up in demand’ in 2021, due to China’s rapid recovery and the snap back from the worst impact of Covid-19 induced decline in growth in 2020 in the major economies, including the US, EU, UK, China and Japan.
Furthermore, it observed that major fiscal support from governments and monetary easing by central banks, have also contributed to the improving consumer sentiment and increasing consumption expenditure trends seen in H1 2021. However, Olam added that the pace of economic recovery across the world is uneven and certain regions, including South Asia and Southeast Asia are facing economic challenges arising from a renewed upsurge in Covid-19 cases.
In spite of uncertain conditions, Olam Co-Founder and Group CEO, Sunny Verghese welcomed its continued upturn in performance for the first half of 2021.
He said: “Our strongest operational earnings since inception reflect the underlying strength and resilience of our businesses despite the impacts of Covid-19 and is a testament to the strength of our business model, commitment of our people and depth of our customer and supplier partnerships across more than 60 countries.
“We continue to execute our re-organisation with OFI’s planned concurrent listings in London and Singapore, representing the best combination of listing venues. We are excited about the prospects of listing OFI as an attractive play for the growing demand for natural, plant-based ingredients and value-added solutions, which are sustainably sourced and traceable. Separately, we are evaluating various strategies to maximise OGA’s long-term growth potential and value enhancement within the Group as it continues with its plan for carve-out, potential IPO and demerger by H1 2023.”
“Looking forward, we expect our industry to continue its recovery in the second half of the year, benefiting from the tailwind of favourable macro conditions following the snap back from the worst impacts of Covid-19. Notwithstanding the differential impact of Covid-19 globally, Olam continues to play an important role in providing essential food staples, food ingredients, feed and fibre to customers around the world in a safe, responsible and sustainable way.”
