Olam Q2 profit rises 20% as food business performs strongly

Olam International's warehouse (right) and storage and distribution van (left).
Olam International's warehouse (right) and storage and distribution van (left). PHOTO: OLAM INTERNATIONAL

SINGAPORE (REUTERS, BLOOMBERG) - Singapore-listed commodity trader Olam International reported on Friday (Aug 12) a 20 per cent rise in its second-quarter profit to S$114.9 million from a restated S$95.8 million a year earlier, helped by a strong performance in its overall food business.

Operational profit, which excludes exceptional items, rose 19.2 per cent to S$114.8 million.

The company said its confectionery and beverage ingredients segment, as well as its food staples and packaged foods business, performed strongly.

Olam, which counts Singapore state investor Temasek Holdings and Japan's Mitsubishi Corp as its largest shareholders, is a major player in markets of a number of commodities including cocoa, coffee and edible nuts.

Revenue climbed 3.5 per cent to S$4.98 billion in the period.

Sales volumes at the company's food staples and packaged foods segment climbed 32 per cent in the quarter from a year ago, Olam said. Volumes at its confectionery and beverage ingredients business also increased.

Revenue in the first half of the year was "modest" due to lower prices of some commodities, it said.

The Bloomberg Agriculture Subindex, which tracks prices of eight commodities including coffee, soybeans, sugar and wheat, averaged 2 per cent higher in the second quarter from a year earlier. Benchmark palm oil prices in Malaysia averaged about 18 per cent higher in the quarter. Sugar futures were about 37 per cent higher, while arabica coffee slipped about 5 per cent and cocoa was little changed.

"We look forward to generating value from our recent initiatives, including the flour and pasta manufacturing facilities in Nigeria, our enlarged peanut shelling business in the USas well as our JV in Japan with strategic partner Mitsubishi Corporation," chief executive officer Sunny Verghese said in the statement.