SINGAPORE — Buoyed by a strategy of pursuing growth in prioritized platforms and working to turn around underperforming businesses, Olam International posted solid results in fiscal 2017.

Profit after tax and minority interests (PATMI) for the year ended Dec. 31, 2017, was S$431.5 million (U.S. $327 million), up 19% from S$363.8 million in fiscal 2016. For the fourth quarter of 2017, PATMI increased 7% to S$109.7 million, up from S$102.3 million in the same period of last year.

Revenue for the year was S$26.273 billion (U.S. $19.91 billion), up 28% from S$20.587 billion in fiscal 2016. For the fourth quarter, revenue was S$7.235 billion, up 19% from S$6.106 billion. Sales volume was 22.534 million tonnes in fiscal 2017, up 56% from 14.416 million tonnes during fiscal 2016, and 7.796 million tonnes during the fourth quarter, up 85% from 4.210 million tonnes a year ago.

Neelamani Muthukumar president CFO of Olam
Neelamani Muthukumar, president and chief financial officer

“Very strong financial performance in 2017 across all key metrics,” Neelamani Muthukumar, president and chief financial officer, said during a Feb. 27 conference call with analysts. “You take volume, revenue, EBITDA, PATMI, operational PATMI, free cash flow to equity, gearing. So across all these key metrics, we have grown significantly and delivered very strong financial results. We have enlarged our share capital by S$650 million, S$585 million coming in prior to December and another S$65 million coming in early in January, taking our overall share capital increase to S$650 million, and also supported by higher retained earnings during the year with significantly lower debt. We had reduced debt by more than $1.9 billion, and that has resulted in a stronger balance sheet getting into 2018.

“We remain focused and continuing to execute our 3-year Strategic Plan. We are looking at pursuing growth in our prioritized platforms and, more importantly, turning around all of our four underperforming assets. And already, three of them are clearly under way, and only the tomato business needs to be focused on going forward in 2018.”

Olam’s Food Staples & Packaged Foods earnings before interest, tax, depreciation and amortization (EBITDA) for fiscal 2017 was S$359.7 million, up from S$330.2 million a year earlier. Revenues increased to S$9.767 billion from S$6.110 billion.

“(Food Staples & Packaged Foods) had an increase of S$30 million in EBITDA, up from S$330 million to S$360 million, supported by improved EBITDA in grains milling in West Africa, all the increased capacity that we had in Ghana, as well as in Nigeria, as well as Cameroon and Senegal, which had market pickup issues in 2016, have also come to the party, and they have contributed more in 2017,” Muthukumar said. “Both rice and dairy trading businesses have done well, and this was partly offset by a lower contribution from sugar and packaged food business in Nigeria.

“Overall, the investment capital grew from S$4.5 billion to S$4.6 billion, mainly on account of higher fixed capital investment in animal feed, mills and hatchery business in Nigeria. I forgot to call out, it came into commercial production in the second half of 2017, has gone off to a very good start and is poised for a strong contribution in 2018 as well. We had expanded our wheat milling capacity in Ghana and Nigeria as well as our continued investment in Upstream palm plantation in Gabon. However, working capital was lower in spite of significant increase in volumes and revenue on account of optimization initiatives but also supported by lower commodity prices.”