SINGAPORE — Olam International Limited reported on May 14 a 17% growth in Profit After Tax and Minority Interest (PATMI) of S$305.8 million for the first nine months of 2013, compared to S$261.4 million in the same period a year ago.
Excluding exceptional items, PATMI increased by 15% to S$300.7 million in 2013. Sales revenue increased by 19.7% to S$14.31 billion as sales volume grew 61.5% to 11.7 million tonnes.
The Food category, which accounted for 89% of total volumes, 77.7% of total revenue and 88.8% of total net contribution, saw sales volume increase by 70.6% and net contribution by 22% compared to 2012. Sales volume for the Non-food category improved by 12.5% and net contribution increased by 30% as the Industrial Raw Materials segment reported a 42% growth in net contribution which was partially offset by the decline in net contribution from the Commodity Financial Services segment.
“The overall results continued to demonstrate the strength and resilience of the Olam business model. We are confident that the well differentiated and defensible competitive position that we have built across multiple platforms will continue to deliver profitable growth,” said Olam’s Sunny Verghese. “Our focus on portfolio optimization and positive cash flow achieved during the quarter were consistent with our recently updated strategy of pursuing ongoing profitable growth with an increased emphasis on productivity improvements and accelerated cash generation.”
The Q3 FY2013 results included a net exceptional loss of S$13 million mainly from the recognition of costs incurred on the termination of the proposed sugar refinery projects in Nigeria following regulatory changes and in Brazil as a result of closing conditions not being met, as previously announced.
“Segment performance overall met our expectations. The Food Staples & Packaged Goods and Industrial Raw Materials segments both continued to perform strongly this quarter as they have over the Financial Year to date,” said Olam’s Executive Director of Finance and Business Development Shekhar Anantharaman. “A positive performance in Edible Nuts, Spices & Beans was diluted by lower capacity utilization and continuing margin pressures in our industrial tomato paste business as we work to reduce the impact of high carry-over inventory from the previous year. We continue to closely monitor the impact of coffee rust disease on our coffee origination and shipment volumes from Central and South America.”
The Food Staples & Packaged Foods segment’s sales volume and net contribution rose 114.4% and 61.1% respectively in 2013. The Grains business continued to drive strong volume growth from higher origination and milling volumes. The Rice and Packaged Food businesses also contributed to higher net contribution/tonne during the period. The Dairy and Sugar businesses were behind plan and are undergoing some targeted restructuring.
The company operates in the attractive agri-sector with strong growth prospects and a leadership position in many of its segments. Olam said it is well positioned to capitalize on the major secular trends that favor the continuing growth and upside possibilities of the industry given its uniquely diversified portfolio.