Olam delivers improved half-year growth, with ingredients achieving steady results
The Olam Group has reported an improved financial position from its half-year results, recording revenues of $28.4 billion across its portfolio, with results up 24.6% year-on-year, with its agricultural business driving three quarters of its growth, reports Neill Barston.
Notably, its ingredients division, OFI, also performed solidly, up 22.1% to S$8.1 billion for the period, with the segment producing a number of solutions for the international confectionery and snacks market.
However, as a marker of key trading headwinds, its EBIT earnings were down 11.8% to S$265.0 million against the very strong comparative period. According to the company, this was down to absorbing the inflationary pressures from a surge in energy costs, and costs incurred from business acquisitions.
Significantly, the company also acknowledged that the significant demand growth rate and pick-up seen in H2 2021 has slowed down in H1 2022 after the geopolitical crisis, accompanied by the hard pandemic lockdowns in China.
Despite these factors, ofi has reportedly continued to make a series of investments related to its private label business, which it anticipates will play a core factor in accomplishing sustained growth.
Olam Co-Founder and Group CEO, Sunny Verghese (pictured), said:“Our strong operating performance in H1 2022 in a highly volatile geopolitical and macroeconomic environment continues to validate our strategy and the effectiveness of our Re-organisation.
“We remain committed and fully prepared to pursue an ofi IPO and demerger pending favourable market conditions, with a primary listing on the premium segment of LSE and a concurrent listing in Singapore. Our strategic partnership with SALIC expected to close by the end of the year will further catalyse Olam Agri’s growth. We are exploring a sale of additional 10% stake in Olam Agri to potential investors and/or prepare Olam Agri for an IPO and demerger based on market conditions.”
Olam Group CFO, N Muthukumar, also welcomed the latest results: “We are pleased with the strong free cash flow generation of S$465.7 million in H1 2022 along with a healthy cash position of S$6.4 billion as well as ample available liquidity, including unutilised credit lines, readily marketable inventories and secured receivables of S$24.3 billion. Our discipline in managing our working capital needs amid rising commodity prices has enabled us to remain resilient.
“Our Re-organisation is progressing as planned with the completion of the debt restructuring of all three operating groups. Olam Agri’s recent US$200.0 million loan from the International Finance Corporation is a timely partnership to immediately address in alleviating food security concerns in emerging markets in Africa and Asia.”