Olam swings to second-half profit of $264.9m on reorganisation-led turnaround

Olam International's coffee business in Colombia. The agri-food giant posted a net profit of S$264.9 million, from a loss of S$87 million a year ago. PHOTO: OLAM INTERNATIONAL

SINGAPORE (THE BUSINESS TIMES) - Agri-food giant Olam International posted a net profit of $264.9 million for its second half ended Dec 31, 2021, from a loss of $87 million a year ago.

This was mainly due to higher operating profit, as well as lower exceptional losses recorded for the period, the company said in a bourse filing on Monday (Feb 28).

Revenue for the second half of the year rose 29 per cent to $24.2 billion, from $18.7 billion a year ago.

A second interim dividend of 4.5 cents per share was recommended for the half year, up from four cents declared a year ago. Details of the payment of the dividend will be announced later.

For the full year, net profit was up 179.4 per cent to a record $686.4 million on strong operating profit growth and significantly lower exceptional losses compared with the year before. Revenue was up 31.2 per cent to $47 billion due to higher prices across most products and commodities in 2021.

Olam noted that its reorganisation plan has driven performance across the group. The company had in 2020 said it would reorganise its business into three units to unlock long-term value.

These include Olam Food Ingredients (OFI), which consists of the company's cocoa, coffee, edible nuts, spices and dairy businesses; Olam Global Agri (OGA), which comprises the grains and animal feed, edible oils, rice, cotton and commodity financial services businesses; and Olam International, which will focus on investing in start-ups involved in digital technology and sustainability after OFI and OGA are spun off.

In an update on its reorganisation plans, the company noted that OFI is set to list in the second quarter of 2022, with a concurrent primary listing in London and a secondary listing in Singapore.

As for OGA, the company is exploring a sale of significant minority stakes in Olam Agri, and/or a potential initial public offering and demerger.

Olam co-founder and chief executive Sunny Verghese said: "We continue to be optimistic regarding the prospects for all three operating groups as they are right at the centre of key global food and consumer trends."

Looking forward, Olam noted that the economic outlook and prospects for the group for 2022 remain positive, with the industry continuing to see strong demand and tight commodity supplies amid supply chain disruptions, barring unforeseen circumstances.

Shares of Olam closed up one cent, or 0.6 per cent, at $1.71 on Friday.

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