Olam reports 2010 fiscal year results

by World Grain Staff
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SINGAPORE — Olam International Limited reported on Aug. 26 a 42.7% increase in net profit after tax (NPAT) to S$359.7 million for the full year ended June 30.

The results for FY2010 included net exceptional gains of S$87.6 million as a result of negative goodwill arising from the completion of the purchase price allocation for tomato processing assets in the U.S. and almond orchards in Australia (net of transaction costs and one-off impairment charges of S$1.4 million related to certain ginning assets in the U.S.).

For reference, FY2009 results also carried net exceptional gains of S$69.8 million due to the buy-back and exchange of convertible bonds and asset impairment losses. Excluding these exceptional items, NPAT grew by 49.3% from S$182.2 million in FY2009 to S$272.1 million in FY2010.

Olam’s Group Managing Director and Chief Executive Officer Sunny Verghese said: "We had exceptionally strong fourth quarter results, which led to our achieving full year results well ahead of our earlier expectations. The results achieved reflect substantial progress in achieving the objectives of

our growth strategy. That strategy, which includes increasing our participation in attractive parts of the value chain and expanding both our upstream and midstream profile, is generating targeted returns faster than planned. Our net profit margin improved from 2.1% in FY2009 to 2.6% in FY2010, in line with our stated objectives of both diversifying our portfolio and achieving a step up in our margin profile. More importantly, the results are evidence of our execution ability and the inherent value of the strategic initiatives outlined in our long term growth plan. It also shows that our acquisitions pursued since 2007 are working well. Acquisitions are contributing a larger share of our total NC and EBITDA than ever before."

"We have now executed 15 of the top 20 initiatives identified in our growth plan, with several of these contributing immediately to the bottom line in FY2010. There are some activities which are still in their gestation phase, but we expect positive returns to accelerate from FY2011 in these areas. We are thus still in the early phases of our growth strategy in many areas, even though we are already generating solid returns from many of these investments."

During the year, Olam strengthened its balance sheet significantly to fund the growth initiatives that will be undertaken over the two three-year planning periods (FY2010-15).

Olam’s Chief Financial Officer Krishnan Ravikumar said: "In FY2010, we put in place new equity as well as committed medium to long-term debt to strengthen our balance sheet and support our growth needs. From July 2009 until today, we have raised and are deploying close to $2 billion of capital."

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