Olam's Q1 net profit rises 9.8% to $158m

Lower net finance costs and taxation help lift bottom line

Commodities trader Olam International posted a 9.8 per cent rise in first-quarter net profit to $157.97 million, on the back of an 8.5 per cent bump in the sale of goods and services to $6.3 billion.

Lower net finance costs and taxation helped lift the bottom line.

Ebitda (earnings before interest, taxes, depreciation and amortisation) fell by 7.7 per cent to $368.1 million for the three months ended March 31, from $398.6 million for the corresponding quarter last year.

Olam's net finance costs slipped to $87.4 million for the first quarter, from $139.6 million in the same period last year, largely as a result of lower net debt and changes in borrowings mix.

Sales volume rose by 56.1 per cent compared with the first quarter of last year, mainly due to higher trading volumes in grains for the quarter.

Olam announced that in January , it acquired a 30 per cent stake in Vietnam's second-largest cashew processor Long Son Joint Stock Company for US$20 million (S$26.7 million).

  • AT A GLANCE

  • REVENUE: $6.3 billion (+8.5%) 

    NET PROFIT: $158 million (+9.8%)

The transaction allowed Olam to secure higher volumes for marketing of kernels to meet increased Asian demand, the company said.

Also in March, Olam disposed of its entire 50 per cent interest in Nauvu Investments to Wilmar International for some US$148 million. Nauvu was a 50-50 joint venture between Olam and Wilmar that held investments in the Sifca Group.

Olam also disposed of its wholly owned Indonesian subsidiary PT ACE Dalle Kokoa Manufaktur, which held land as a primary asset, to PT Mega Khatulistiwa Propertindo, for around US$14 million.

"Olam will continue to execute on its 2016-2018 strategic plan in 2018 and pursue growth in its prioritised platforms while putting sustainability at the heart of its business.

"It remains focused on turning around underperforming businesses, ensuring gestating businesses reach full potential and delivering positive free cash flow," the company said.

Olam shares yesterday ended two cents higher at $2.32.

A version of this article appeared in the print edition of The Straits Times on May 15, 2018, with the headline 'Olam's Q1 net profit rises 9.8% to $158m'. Print Edition | Subscribe