H1 FY2013 : Financial Highlights
- Sales Volume of 7.8 million tonnes, up 71.9%
- Sales Revenue of S$9.6 billion, up 24.3%
- Net Contribution (NC) of S$734.3 million, up 21.0%
- Profit After Tax and Minority Interest (PATMI) at S$ 197.3 million, a growth of 21.3%
- Excluding exceptional items, PATMI at S$179.2 million, a growth of 10.1%
- Food category Sales Volume up 83.1%, NC up 24.2%
- Industrial Raw Materials Sales Volume up 16.1%, NC up 45.0%
- EPS of 7.8 cents/share, up 17.8%
H1 FY2013: Other Highlights
- Completed transaction for the sale & lease back of 4,795 acres of Almond Orchards in California releasing cash of S$68.5 million and resulting in a net gain (after tax) of S$18.1 million
- Announced acquisition of Northern Coffee Corporation for US$6.2 million, 50% of Acacia investments for US$35 million to expand edible oil refining and distribution in East Africa, Dehydro Foods Limited, a leading processor of dehydrated onions in Egypt for US$30.8 million and Seda Solubles, a soluble coffee manufacturer in Spain for US$52 million. All these acquisitions are “On-Plan” and “On-Strategy”
- Completed the acquisition of the remaining shares of New Zealand Farming Systems Uruguay Limited (“NZFSU”) and delisted the company from the NZX Main Board
- Announced the termination of the proposed US$240 million investment in Usina Acucareira Passos (“UAP”), an integrated sugar milling operation in Brazil
* Based on weighted average number of shares of 2,390,213,869 for H1 FY2013 (compared to weighted average number of shares of 2,442,280,702 for H1 FY2012)
** Based on weighted average number of shares of 2,390,213,869 for Q2 FY2013 (compared to weighted average number of shares of 2,442,326,536 for Q2 FY2012)
Olam International Limited (“Olam” or “the Company”), a leading global, integrated supply chain manager and processor of agricultural products and food ingredients, today reported a 21.3% growth in Profit After Tax and Minority Interest (PATMI) of S$197.3 million for H1 FY2013 compared to S$162.7 million in H1 FY2012. Excluding exceptional items, PATMI increased by 10.1% to S$179.2 million in H1 FY2013. Sales Revenue increased by 24.3% to S$9.59 billion as Sales Volume grew 71.9% to 7.8 million metric tonnes. Overall NC grew 21.0% to S$734.3 million.
The Food category, which accounted for 88.6% of total volumes, 76.9% of total revenue and 88.4% of total NC, saw Sales Volume increase by 83.1% and NC by 20.0% compared to H1 FY2012. Sales Volume for the Non-food category improved by 16.1% and NC increased by 29.2% as the Industrial Raw Materials segment reported a 45.0% growth in NC which was partially offset by the decline in NC from the Commodity Financial Services segment.
Olam’s Group MD & CEO, Sunny Verghese said: “We are pleased with the overall results of the Company for H1 FY2013 where we continue to see healthy growth rates in the Food Category and a recovery in the Cotton business within the Industrial Raw Materials segment. We have also successfully stabilised the situation that surrounded the Company in the recent past and the endorsement that we received for our recent Renounceable Rights Issue of Bonds with Warrants has further strengthened the Company’s financial position. We are grateful for the strong support that we have received from our shareholders, bondholders, lenders, customers, suppliers and employees during this period.”
Olam’s Executive Director of Finance and Business Development, Shekhar Anantharaman said: “The Company’s H1 FY2013 results show substantial increase in volumes and sales revenues which underpinned the growth in overall NC. It is encouraging to note that growth in earnings in H1 FY2013 was driven by both the core business as well as the investments made in the recent past.”
Shekhar Anantharaman also added: “We have successfully completed a transaction for the sale and lease back of 4,795 acres of Almond Orchards in California which releases cash and will enhance returns. It also provides a model for replicating this structure in other platforms and geographies. We completed the planned investments in edible oil (East Africa), dehydrates (Egypt), soluble coffee (Spain), coffee plantation (Zambia) and dairy farming (Uruguay) while we chose to terminate the previously announced acquisition of sugar milling assets in Brazil where we could not reach a satisfactory agreement with the vendors on commercial terms.”
The Edible Nuts, Spices & Beans segment grew Sales Volume by 12.5% and NC by 18.5% during H1 FY2013. The growth in volume came from both existing businesses as well as the acquired Hazelnuts business in Turkey. The Peanut business continued to perform well, boosted by a large crop in the US which aided full capacity utilisation at the blanching facilities. The business performed above plan despite falling markets. The dehydrates business within the Spices & Vegetable Ingredients platform and the Sesame business also turned in a strong performance during this period.
The Confectionery & Beverage Ingredients segment registered an NC growth of 4.4% despite a volume decline of 3.9% in H1 FY2013 due to extended sales and shipment schedules from some major cocoa and coffee origins. Robusta coffee origination out of Indonesia performed ahead of plan. NC growth was achieved on account of both improving supply chain margins, as well as enhanced margins resulting from investments in upstream coffee plantations and midstream cocoa processing in Spain and UK.
The Food Staples & Packaged Foods segment’s Sales Volume and NC rose 128.7% and 32.2% respectively in H1 FY2013. The Grains business continued to lead volume growth as it generated higher origination and milling volumes. Rice, Palm and the larger Packaged Food businesses also contributed to volume growth. NC per tonne fell to S$55 from S$94 a year ago mainly due to the changing product mix within the segment. The period saw a larger increase in Grains origination volumes which has a structurally lower NC per tonne compared to the other product platforms in the segment. Rice, Palm and Packaged Food businesses continued to perform well while Dairy business was behind plan.
The Industrial Raw Materials (IRM) segment recorded a Sales Volume growth of 16.1% and a growth of 45.0% and 24.8% in NC and NC per tonne respectively in H1 FY2013. The Cotton business saw both volume and margin recovery during the period and is expected to stabilise at these levels from H2 FY2013. The Wool and Rubber businesses were on track while Wood products remained flat. The SEZ business had a lower contribution in H1 FY 2013 compared to the prior corresponding period.
The Commodity Financial Services (CFS) segment reported a loss at NC level of S$9.8 million in H1 FY2013 compared to a gain of S$0.4 million in H1 FY2012 due to difficult trading conditions. While some recovery is anticipated in H2 FY2013, overall performance for CFS is expected to be below plan for FY2013.
Outlook and Prospects
The Company operates in an attractive sector with strong growth prospects. Major secular trends favour the continuing growth and attractive characteristics of the industry.
The Company is currently in the process of recalibrating its strategy and is expected to complete the exercise within the next three months after which a suitable announcement will be made.
Note: This release should be read and understood only in conjunction with the full text of Olam International Limited’s H1 FY2013 Financial Statements lodged on SGXNET on February 7, 2013.