SINGAPORE — Excluding exceptional items, Olam International Limited reported on May 15 that net profit for the third quarter fell 15.9% to S$102.2 million, due to higher depreciation, amortization and tax expenses.

The decline in Operational PATMI was primarily driven by higher depreciation and amortization expenses at S$57.5 million compared to S$39.4 million in the third quarter of 2013 and an increase in tax expenses to S$37.6 million as compared to S$26.8 million for the prior corresponding period. These results include an overall reduction in the fair value of biological assets by S$26.4 million, from a net gain of S$17.7 million in the third quarter of 2013 to a net loss of S$8.7 million in the third quarter of 2014.

The company reported an 88.6% growth in profit after tax and minority interests (PATMI) to S$576.7 million, which include an exceptional fair value gain of S$271 million from the revaluation of its holding in PureCircle Limited.

Sales volumes were down 2.4% in the first nine months of 2014, as compared to the record to the same period a year ago, which had shown a record 61.5% growth over the prior period (the first nine months of 2012).

“The twin goals of profitable growth and generating positive free cash flow continued to be the focus of our actions during this period. We are ahead of target in executing our strategic plan initiatives to release cash and optimize our balance sheet,” said Olam’s Group Managing Director and Chief Executive Officer Sunny Verghese. “We have achieved a good balance between investing selectively for future growth while continuing to extract value from investments already made.”

Olam has announced 12 strategic initiatives, of which nine have been completed by the third quarter of 2014. These nine completed initiatives have released cash of S$395.8 million, generated a P&L gain of S$85.7 million and added S$16.5 million to capital reserves. Six out of the nine initiatives contributed S$309.5 million of cash, S$55.5 million in P&L gains and S$16.5 million addition to capital reserves.

The remaining three initiatives, which are expected to be completed in the fourth quarter, are likely to release further cash of approximately S$154.6 million, generate a P&L gain of approximately S$22.8 million and add approximately S$18.2 million to capital reserves. 

Food Staples & Packaged Foods segment volumes were stable with a marginal decline of 0.9% compared to a strong prior period. Segment revenues declined by 3.2%, mainly due to lower rice and grain prices compared to last year. EBITDA declined by 21% due to lower trading margins in grains and rice, adverse impact due to the devaluation of the local currency in Ghana, and continuing underperformance in the upstream dairy business, particularly in Rusmolco, Russia.