A surge in sales sent earnings shooting up at commodity trader Olam International in the second quarter, it reported yesterday.
Net profit rose 28.5 per cent to $147.7 million for the three months to June 30 while turnover rose 30.9 per cent to $6.5 billion.
Performance was strong in the food staples and packaged foods segment, where turnover came in at around $2 billion, well up on the $1.4 billion recorded in the same period last year. Olam noted that the growth was driven by its grains business and wheat milling operations in West Africa.
Another star performer was the industrial raw materials, agricultural logistics and infrastructure segment, where revenue increased from $786.6 million last year to $1.2 billion, owing to higher cotton volumes and prices.
Higher volumes and prices for cashews and peanuts propped up the edible nuts, spices and vegetable ingredients segment.
But there were headwinds, including margin pressure in the cocoa supply chain and trading business, which ate into confectionery and beverage ingredients earnings, as well as underperformance in wood products.
Earnings per share for the quarter rose from four cents last year to 4.91 cents, while net asset value per share was 198.3 cents, against 190.82 cents as at Dec 31.
AT A GLANCE
REVENUE: $6.52 billion (+30.9%)
NET PROFIT: $147.7 million (+28.5%)
DIVIDEND: 3.5 cents a share (+16.7%)
An interim dividend of 3.5 cents a share has been declared, up from three cents a share last year.
Olam noted in a statement: "While expecting macroeconomic uncertainties to continue through the year, Olam believes its diversified and well-balanced portfolio provides a resilient platform to navigate the challenges in both the global economy and commodity markets."
Net profit was up by 27.5 per cent to $291.5 million for the six months, reflecting the 26.5 per cent increase in turnover to $12.3 billion.
Olam co-founder and chief executive Sunny George Verghese said in a statement: "Our strong (second-quarter) performance on top of a solid (first quarter) has delivered significantly improved first-half results. Our food category segments, in particular, lifted overall performance in (the second quarter).
"This reflects the continued execution of our strategic plan and our disciplined focus on capital management. We are confident that our business model will remain resilient and our balanced approach to pursuing current and future growth will serve us well."
Olam shares closed up three cents or 1.5 per cent at $1.98 after the results were announced.