Olam International Q2 2019 PATMI at S$61.5 million Maintains interim dividend at 3.5 cents per share

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  • Steady operating performance with Q2 2019 and H1 2019 EBITDA growth of 14.1% to S$351.2 million and S$771.5 million respectively
  • Q2 2019 and H1 2019 PATMI were lower by 34.5% and 8.5% to S$61.5 million and S$230.3 million respectively
  • Excluding exceptional losses and impact of SFRS(I) 161, Q2 2019 and H1 2019 PATMI would be higher at S$73.6 million and S$261.0 million respectively
  • Strong, positive Free Cash Flow to Equity (FCFE) of S$864.2 million for H1 2019
  • Further improvement in net gearing to 1.28x (from H1 2018: 1.46x)
  • Board of Directors declares an interim dividend of 3.5 cents per share for H1 2019 (H1 2018: 3.5 cents)
S$ millionH1 2019H1 2018 % ChangeQ2 2019Q2 2018% Change
 Volume (‘000 MT)19,100.213,606.640.4  10,639.66,641.460.2
 Revenue  15,943.913,724.616.2  8,596.07,429.215.7
 EBITDA771.5676.014.1351.2307.914.1
 PAT   207.7236.4(12.1)  48.986.0(43.2)
 PATMI   230.3251.9(8.5)  61.594.0(34.5)
 Operational PATMI248.0254.0(2.4)67.091.4(26.7)
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Co-Founder & Group CEO, Sunny Verghese said:

“We delivered a steady set of results amid growing political and macroeconomic uncertainties affecting most of our markets. We are pleased with the EBITDA growth during the first half of 2019, which reflects the effectiveness of our differentiated and defensible strategy.

“We are making good progress in executing our new Strategic Plan. We are investing in several new initiatives to offer differentiated solutions to our existing customers as well as develop new customer segments and channels. We also stay focused on streamlining our portfolio by recycling capital and focusing on high-growth businesses.” 

Executive Director and Group COO, A. Shekhar said:

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“We further strengthened our balance sheet during the first half of the year, with improved
gearing and free cash flows.

“We are well-positioned for the second half of the year as we approach the peak of the
procurement season for several of our commodities, with likely increases in working capital
deployment. We will also stay focused on the divestment of the identified non-core assets as we complete our planned fixed capital investments, including the proposed acquisition of
Dangote Flour Mills during this period.”

Q2 2019

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– EBITDA (Earnings Before Interest, Tax, Depreciation, and Amortisation) grew by 14.1%
to S$351.2 million (Q2 2018: S$307.9 million) due to higher contribution from all
segments except for Edible Nuts and Spices, and Confectionery and Beverage Ingredients.

– PATMI (Profit After Tax and Minority Interest) declined 34.5% year-on-year (YoY) to
S$61.5 million (Q2 2018: S$94.0 million) on higher depreciation and amortisation, net
finance costs and exceptional losses. Excluding exceptional losses and the impact of SFRS(I) 16, PATMI would have been higher at S$73.6 million.

H1 2019

– EBITDA grew 14.1% to S$771.5 million (H1 2018: S$676.0 million) on higher
contribution from all segments except Industrial Raw Materials, Infrastructure and
Logistics.

– PATMI decreased 8.5% YoY to S$230.3 million (H1 2018: S$251.9 million) as EBITDA
growth was offset by higher depreciation and amortisation, net finance costs and
exceptional losses. Excluding exceptional losses and the impact of SFRS(I) 16, PATMI
would have been higher at S$261.0 million.

– Operational PATMI, which excludes exceptional items, was slightly lower YoY at
S$248.0 million (H1 2018: S$254.0 million). Excluding the impact of SFRS(I) 16,
Operational PATMI would have increased by 2.8% to S$261.0 million.

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Cash flow and gearing

– Generated positive Free Cash Flow to Equity of S$864.2 million (H1 2018: -S$167.0
million) on the significantly lower deployment of working capital

– Net gearing as at June 30, 2019, further improved to 1.28 times (H1 2018: 1.46x) on
lower net debt arising from the reduction in working capital.

Singapore, August 14, 2019

– EBITDA grew 5.2% to S$176.0 million, mainly due to improved contribution from Grains,
Dairy and Edible Oil supply chain businesses and Packaged Foods, partly offset by
reduced contribution from Rice and Sugar.

Industrial Raw Materials, Infrastructure and Logistics
– Revenue increased 14.9% to S$2.5 billion on higher sales volumes for Cotton and
Rubber.

– EBITDA declined 10.2% to S$84.5 million on lower contribution from Cotton and closure
of the Rubber and Fertiliser trading desks, which offset growth in Wood Products.

Commodity Financial Services

– The segment reported EBITDA of S$15.2 million, reversing a S$0.4 million loss in H1
2018.

OUTLOOK

Even as political and economic uncertainties are likely to affect global trading conditions in
2019, Olam believes its diversified and well-balanced portfolio provides a resilient platform to navigate the challenges in both the global economy and commodity markets.

Olam is executing on the four strategic pathways for growth as set out in the 2019-2024
Strategic Plan. It will strengthen, streamline and focus its business portfolio, drive margin
improvement by enhancing cost and capital efficiency, generate additional revenue streams
by offering differentiated products and services, and explore partnerships and investments in select new engines for growth.

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