Global food and agri-business, Olam Group, has reported its strongest H1 Operational PATMI since inception as it moved forward with its Re-organisation Plan, announced in January 2020.
Strong growth momentum from new Operating Groups
- H1 2021 Operational PATMI increased 116.0% to $436.6 million, its highest since inception
- Reported PATMI for H1 2021 up 26.7%, despite a high base a year ago from exceptional gains
- Strong EBIT growth
- Olam Food Ingredients (OFI): EBIT up 22.9%
- Olam Global Agri (OGA): EBIT up 58.9%
- Board of Directors declares interim dividend of 4.0 cents per share (H1 2020: 3.5 cents)
Continued progress on Re-organisation plan
- OFI is seeking a primary listing on the premium segment of the London Stock Exchange with concurrent listing on the Singapore Exchange ; the IPO and concurrent demerger of OFI remains on course for H1 2022
- OGA is evaluating various strategies to maximise its long-term growth potential and value enhancement within the Group, including a potential IPO and concurrent demerger from the Group in H1 2023
Olam Co-Founder and Group CEO, Sunny Verghese said: “Our strongest operational earnings since inception reflect the underlying strength and resilience of our businesses despite the impacts of Covid-19 and is a testament to the strength of our business model, commitment of our people and depth of our customer and supplier partnerships across more than 60 countries.
“We continue to execute our Re-organisation with OFI’s planned concurrent listings in London and Singapore, representing the best combination of listing venues. We are excited about the prospects of listing OFI as an attractive play for the growing demand for natural, plant-based ingredients and value-added solutions, which are sustainably sourced and traceable. Separately, we are evaluating various strategies to maximise OGA’s long-term growth potential and value enhancement within the Group as it continues with its plan for carve-out, potential IPO and demerger by H1 2023.
“Looking forward, we expect our industry to continue its recovery in the second half of the year, benefiting from the tailwind of favourable macro conditions following the snap back from the worst impacts of Covid-19. Notwithstanding the differential impact of Covid-19 globally, Olam continues to play an important role in providing essential food staples, food ingredients, feed and fibre to customers around the world in a safe, responsible and sustainable way.”
Olam Group CFO, N Muthukumar said: “Even as we deployed significant capital expenditure for organic growth and strategic acquisitions, we continued to maintain a robust balance sheet, further strengthened by the recently concluded rights issue. “We continued to diversify funding sources and innovate on financing, including a unique two-tier AtSource-linked sustainability financing facility aggregating US$1,450 million. We continue to make good progress on our Re-organisation Plan and will formalise the cost plans and capital structure for OFI and OGA, to meet their respective needs, while driving profitable growth and improving returns.”
Olam Group Financial Performance
- Revenue increased 33.7% year-on year (YoY), reflecting strong growth from both OGA and OFI. OGA contributed 67.8% of total Group revenue, OFI 29.8%, and OIL 2.4% respectively.
- PATMI grew 26.7% on robust operating profit and lower net finance costs in H1 2021, even against a high base in H1 2020 that had net exceptional gains of S$130.6 million.
- Excluding non-recurring exceptional items, Operational PATMI more than doubled to a record S$436.6 million, a 116.0% growth over the prior corresponding period.
- EBIT jumped 51.4% to S$641.6 million on strong growth at both OFI and OGA and lower OIL losses: OFI contributed to 49.3% of total Group EBIT, OGA contributed 63.5%, and OIL -12.8%.
- FCFE was negative at S$398.3 million due to the significant increase in capital expenditure on investment and acquisitions, including the Olde Thompson acquisition.
- Net gearing increased to 1.60 times compared to a year ago (1.29 times).
H1 2021 Performance by Operating Group
- Revenue increased 12.6% to S$6.8 billion, driven principally by stronger sales from the Ingredients & Solutions segment, which made up for the reduction in contribution from Global Sourcing segment.
- EBIT grew strongly at 22.9% to S$316.3 million in H1 2021, demonstrating a strong recovery from the impact that Covid-19 had on some of its businesses in H1 2020.
Olam Group Executive Director and CEO of OFI, A. Shekhar said: “We had a strong first-half as we continued to integrate and drive synergies across our portfolio. We are also making disciplined investments in specific product, channel and category expansion opportunities identified across OFI’s on-trend and growing portfolio. This includes our newly acquired business in Olde Thompson, the green chilli pepper business from Mizkan and the dried onion ingredients business in the US, all of which already started contributing positively to our earnings in H1 2021. “The results further demonstrate that OFI is a strong business that is uniquely positioned to take advantage of long-term consumer trends within the food and beverage industry. The integrated global network, servicing large, attractive and growing end-use categories, within an expanding on-trend ingredients portfolio, makes us a compelling investment case for anyone looking to tap into growing global demand for food that is healthier, traceable and sustainable.”
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Editor, International Confectionery
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