Olam profit soars on sales surge

by Eric Schroeder
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SINGAPORE — Backed by strong volumes and revenue growth, EBITDA at Olam International Ltd. exceeded S$1 billion for the first time in the nine months ended Sept. 30. Olam International’s profit after tax and minority interests (PATMI) also improved, increasing 26.7% to S$316 million for the nine months.

Revenue in the nine months ended Sept. 30 totaled S$19.037 billion, up 31.5% from S$14.481 billion.

Neelamani Muthukumar, president and group chief financial officer, said EBITDA during the nine months increased nearly 19%, backed by “stellar performance” from the Edible Nuts, Spices & Vegetable Ingredients platform. The Food Staples & Packaged Foods business again turned in a good performance, he said.

Muthukumar said EBITDA within the Food Staples & Packaged Foods business unit totaled S$291 million, up 29% from S$226 million in the first nine months of fiscal 2016.

“Grains and animal feed business has done well,” Muthukumar said during a Nov. 15 conference call with analysts. “Animal feed and hatchery plant, which we are commissioned in Nigeria, has got off to a strong start. Our wheat milling operations across West Africa is doing very well. The grains trading platform, which had a volume of 2 million tonnes last year, is poised to end this year above the 10 million tonnes of trading volumes, and that is contributing to the overall increasing volumes at the portfolio level.”

Muthukumar said the company’s rice business is “steady” and the sugar refining business in Indonesia is performing well.

“The only issue in this segment is Packaged Foods … due to difficult trading conditions in Nigeria,” he said. “However, bulk of it, we believe, is behind us. The Nigerian naira currency is pretty stable. The newly commissioned Ranona plant is off to good start. There is considerable excitement in the Nigerian markets on the products that we have launched. Our biscuit factory, including the second line that we commissioned this year in Ghana, is up to capacity. And we expect the PFB business to grow from here on.”

Olam has ramped up its investment capital, Muthukumar said, to S$5 billion from S$3.5 billion previously. He said the higher fixed capital reflects several factors, including the construction of animal feed and hatchery business in Nigeria; the expansion of wheat milling facilities, both in Nigeria and Ghana; as well as Olam’s continued investment in its upstream palm plantation in Gabon.

In the third quarter ended Sept. 30, EBITDA totaled S$243 million, up 18% from S$205.5 million in the same period a year ago. PATMI increased 17.5% to S$24.1 million from S$20.5 million, while revenue rose nearly 42% to S$6.712 billion from S$4.738 billion.

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