Olam profits down 19% in third quarter

by World Grain Staff
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SINGAPORE — Olam International Limited on May 15 reported third-quarter profit after tax of S$102.3 million, a drop of 19% from the S$126.2 million reported at the same time last year. Profit After Tax and Minority Interest (PATMI) was S$98.7 million for the quarter, a decrease of 22.5% from the S$127.3 million reported for the third quarter of 2011.

For the nine months ended March 31, Olam reported profit after tax of S$289 million compared to S$301.7 million a year ago. PATMI was S$261.4 million for the nine months in 2012 compared to S$302.4 million a year ago. PATMI declined 13.6% as compared to the prior period, mainly due to exceptional items recorded in the nine months of 2011. PATMI, excluding exceptional items, declined by 1.9% as compared to the prior period.

“While many of our businesses continued to perform well, we are not entirely immune to the difficulties being experienced in many global markets,” said Olam’s Group Chief Executive Officer Sunny Verghese. “This is reflected in the results of some of our operating businesses which are more sensitive to these external events. As a result, the group’s performance has been a tale of two parts. The first part reflects the performance of the Food category which comprises three out of our five reporting segments and accounts for 78.4% of revenue. This category reported strong growth in both volumes and margins for the period. Sales volume increased by 20.6% and NC increased by 30.9% in this year compared to last year.

“The second part reflects the performance of the Non-food category – the Industrial Raw Materials (IRM) and the Commodity Financial Services (CFS) segments.  The IRM segment continued to be impacted during the third quarter of the year, following on its weak performance in the first half of this year, primarily as a result of the exceptional events that occurred in the Cotton markets. 

Sales volume for the nine-month period grew 17.2% to 7.2 million tonnes while sales revenue increased 6.3% to S$11.95 billion. NC grew 15.4% to S$941.7 million as sales volume rose.  

Sales Volume and NC for the Food Staples & Packaged Foods segment rose 26.7% and 27.4% respectively in the first nine months.  In the third-quarter, recorded sales volume and NC grew at 39.8% and 17.7% respectively. The strong volume growth was led by Rice and Grains as these businesses focused on market share growth in Africa. Dairy and Sugar continued to face headwinds and challenging trading conditions during this period.

The Commodity Financial Services (CFS) registered NC of S$0.8 million in the first nine months of 2012 compared to S$21.1 million last year. The segment contributed S$400,000 in NC in the third quarter of 2012 as against S$4.9 million in the previous corresponding period. This was mainly due to the lack of relative value and arbitrage trading opportunities, resulting in the business adopting a risk-off mode during this period.

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