SINGAPORE — Olam International Limited reported on May 15 that net profit for the first quarter ended March 31 dropped 92.1% due to one-time exceptional items.

In the first quarter of 2014, the company reported net exceptional gains of S$293.9 million ($224.1 million) from the revaluation of its stake in PureCircle Limited as well as the sale and leaseback of its almond assets in Australia. The first quarter of 2015 included a net exceptional loss of S$97.2 million resulting mainly from the buyback of outstanding U.S. $750 million, 6.75% bonds due 2018. The bond buyback is expected to generate interest savings of about S$55-$60 million per year over the next three years.

“Excluding the headline impact of exceptional items, our strong underlying performance in Q1 2015 is testament to the disciplined execution of our strategic plan initiatives,” said Sunny Verghese, Olam’s co-founder, group managing director and chief executive officer. 

“We continue to pursue our twin objectives of profitable growth and cash flow generation while investing in selective opportunities that can enhance shareholder value over time. We successfully completed the MMI acquisition in the U.S. as well as the strategic partnership with Sanyo Foods in the Packaged Foods business in this quarter and expect to complete the ADM cocoa acquisition by the end of Q3 this year. Successful completion and execution of these strategic initiatives will position us for further growth in three of our large prioritized platforms.”

Operational profit after tax and minority interest (PATMI), which excludes the exceptional items, was up 25.7% to S$128.5 million. The performance was achieved despite the continued adverse impact of currency devaluation against the U.S. dollar on Olam’s import and domestic distribution businesses in some markets.

Sales volume fell 33.2% as a result of the company’s deliberate strategy to grow in prioritized platforms while reducing volumes or exiting from lower-margin business. Revenue declined 10.7% to S$4.3 billion as lower volumes were offset by higher prices of some commodities.

EBITDA fell by a marginal 1.5% to S$330.1 million. All business segments except the Food Staples & Packaged Foods segment achieved higher EBITDA. This was despite the estimated net negative impact on EBITDA from currency devaluation of about S$12 million.

Food Staples & Packaged Foods volumes and revenue fell 42.1% and 37.7% respectively on the back of the deconsolidation of the Grains business in Australia and the discontinued operation in South Africa.

Although the rest of the Grains business as well as the Rice distribution, Sugar and Dairy supply chain businesses performed well during this period, overall segment EBITDA declined by 34.4%. This was due to the reduced volumes from discontinued operations, the continued underperformance of Dairy farming operations in Uruguay and the impact of currency devaluation on Packaged Foods and the Palm refining and distribution businesses in Nigeria, Ghana and Mozambique. This adverse margin impact of currency devaluation is expected to continue in the near term.

Olam has completed 20 strategic initiatives since April 2013, which released cash of S$966.1 million, generated a P&L gain of S$125.2 million and added S$154.2 million to capital reserves. This includes the sale of a 25% stake in the Packaged Foods business to Sanyo Foods which was completed in the first quarter of 2015, releasing cash of S$219.1 million and adding S$106.2 million to reserves.