Global food and agri-business, Olam Group, today reported strong results for H1 2020 and good progress on its Strategic Plan (2019-2024) and Re-organisation Plan announced in January 2020.
Olam Group is also reporting against its newly formed operating groups for the first time, namely Olam Food Ingredients (OFI), Olam Global Agri (OGA) and Olam International Limited (OIL).
Olam Group Financial Performance Highlights:
- Revenue increased by 7.1% YoY. OGA contributed 58.9% of total Group revenue, OFI 36.1%, and OIL 5.0% respectively.
- PATMI grew 44.4% YoY due to a net exceptional gain of S$130.6 million from the divestments of the remaining 50.0% stake in Far East Agri and the partial stake sale of ARISE P&L, offset partially by one-off exit and closure costs of other de-prioritised assets that were divested or shut down.
- EBIT was down 18.8% YoY due to lower contribution from OFI which in turn was due to lower contribution from Almonds, Hazelnuts and Cocoa processing: OFI contributed to 62.1% of total Group EBIT, OGA 54.0%, and OIL -16.1% respectively.
- Strong cash flow generation with FCFE of S$826.9 million as the Group maintained the strong discipline of its cash flows.
- Net gearing was steady at 1.29 times despite higher net debt with an adjusted gearing of 0.34 times net of readily marketable inventory and secured receivables.
- The Board of Directors has declared an interim dividend of 3.5 cents per share (H1 2019: 3.5 cents).
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Olam Co-Founder and Group CEO, Sunny Verghese said:
“Following the Covid-19 pandemic, we are focused on delivering three key priorities in 2020: i) successfully navigate through the Covid-19 pandemic and emerge stronger; ii) execute our Strategic Plan (2019-24) and deliver our strategic and financial goals for 2020 and beyond; and iii) deliver on our Re-organisation Plan that we announced in January this year.”
“I am pleased that we have done very well against all three objectives and are seeing growing benefits flow to both our financial performance and our competitive position. Our resilient performance amid Covid-19 is a testament to the strength of our diversified portfolio, our differentiated strategy, our committed, dedicated teams, and the unique Olam spirit and culture.”
“We have moved with speed and focused intent through the Covid-19 crisis to protect the safety of our people, maintain the continuity of our operations, keep our supply chains open, serve our customers’ needs reliably, maintain our financial strength and help the communities where we operate in. All of these actions have helped us to continue to transform and improve our Company and has helped us to live up to our Purpose of ‘Re-imagining Global Agriculture and Food Systems”.
“While the year ahead will remain challenging and uncertain with a range of outcomes that could impact demand and supply conditions across geographies, businesses and financial markets, we remain confident in the strength of our business model to emerge stronger from this crisis.”
Olam Group CFO, N Muthukumar said:
“We continue to strengthen our balance sheet and maintain our financial strength through the crisis. In H1 2020, we concluded a series of new financing transactions, including an IFC/JICA loan, sustainability loan, samurai loan and refinanced a European RCF, all of which provided access to a diversified pool of capital to fund our operations and growth. We are pleased with the confidence shown by our banking partners and other debt providers in supporting these initiatives.
“The successful execution of our strategy, our discipline in proactively controlling costs,
conserving cash and managing our capital structure has helped us generate strong cash
flows in H1 2020 (FCFE of S$826.9 million). We have also successfully completed the reorganisation of Olam into the three operating groups (OFI, OGA & OIL) and have reported the H1 results across the new operating groups and in the new segments for these groups.”
“We are now working on determining the appropriate capital structure to serve the needs of our new operating groups and develop and execute a cost transformation and capital
efficiency programme, which will drive profitable growth and further improve our returns
going forward.”
Olam International is a leading food and agri-business supplying food, ingredients, feed and fibre to 25,200 customers worldwide. Our value chain spans over 60 countries and includes farming, processing and distribution operations, as well as a sourcing network of an estimated 5.0 million farmers.
Headquartered and listed in Singapore, Olam currently ranks among the top 30 largest primary listed companies in terms of market capitalisation on SGX-ST.