Olam sees steady progress in 2016

01.03.2017

A strong fourth quarter boosted full-year results at Olam International.

Profit after tax and minority interests (PATMI) for the year ended Dec. 31, 2016, was S$363.8 million ($259.9 million), up 23% from S$295.6 million in fiscal 2015. For the fourth quarter of 2016, PATMI increased 155% to S$102.3 million, up from S$40.1 million in the same period of last year.

Revenue for the year was S$20.587 billion ($14.708 billion), up 8% from S$19.052 billion in fiscal 2015. For the fourth quarter, revenue was S$6.106 billion, up 12% from S$5.448 billion. Sales volume was 14.416 million tonnes during fiscal 2016 and 4.210 million tonnes for the fourth quarter.

“We had all our continued effective borrowing initiatives, which are taken during the year and the previous year, had borne fruit, and that has resulted in net reduction in our interest cost, and we continue to focus on improving the debt tenure and mix going forward,” Sunny Verghese, co-founder and chief executive officer, said during a Feb. 28 conference call with analysts.

He continued, “We have continued to execute on our three-year strategic plan for the period 2016 to 2018, and we have been investing both organic and inorganic, primarily in the grains and animal feed business, namely the acquisition of the wheat milling and pasta manufacturing assets in Nigeria, our continued CapEx investment in the new initiative in this platform, which is the animal feed processing plant, and we during the year acquired Brooks peanut shelling company in the U.S. And we have continued to invest in coffee plantations in Brazil, Tanzania, Zambia and Laos, and also continue to invest in our plantations in Gabon, both in palm and rubber.”

Olam’s Food Staples & Packaged Foods earnings before interest, tax, depreciation and amortization (EBITDA) for fiscal 2016 was S$330.2 million, up from S$212.1 million a year earlier. Revenues increased to S$6.110 billion from S$5.391 billion. The segment’s sales volumes for fiscal 2016 were 9.496 million tonnes, up 20% from 7.904 million tonnes a year earlier.

“It’s very heartening to see a full turnaround of this segment this year,” Verghese said. “Almost all platforms performed very well, and that has resulted in a 56% absolute EBITDA growth year-on-year in this segment.

“There was strong performance from wheat milling operations in West Africa and also the origination business in grains and from Black Sea, the rice trading, the sugar trading, and the dairy supply chain business all delivered very strong results.

“The businesses which were underperforming the prior year, which was primarily the palm supply chain and refining business in Mozambique, the dairy upstream business, especially in Uruguay, and the packaged foods business in West Africa, all had turned around during the year and have delivered an improved performance. And they are in the right trajectory to deliver better in 2017.”


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