Press Release

    Olam International reports net profit (after minority interests) of S$162.7M* for H1 FY2012 – a 14.9% increase over 1H FY2011 *Excluding exceptional items

    Press release

     H1 FY2012: Financial Highlights
     
    • Sales Volume of 4.52 million tons, up 15.8%
    • Revenue of S$7.72 billion, up 18.8%
    • Net Contribution (NC) up 18.5% to S$607.1 million, NC Per Ton up 2.4% to S$134
    • PATMI (Excluding exceptional items) up 14.9% from S$141.6 million to S$162.7 million
    • Net Asset Value up 15.6% to 132.8 cents/share

     

    Consolidated Financial Results Ended December 31

    First Half

    Quarter 2

    FY2012

    FY2011

    Change
    (%)

    FY2012

    FY2011

    Change
    (%)

    Sales Volume (‘000 metric tons)

    4,522.5

    3,904.8

    15.8

    2,660.4

    2,322.7

    14.5

    Revenue (S$ million)

    7,716.4

    6,496.0

    18.8

    4,487.1

    4,042.1

    11.0

    Net Contribution (S$ million) 

    607.1

    512.2

    18.5

    355.1

    309.2

    14.8

    Profit After Tax (S$ million) 

    186.8

    175.5

    6.4

    153.5

    145.8

    5.3

    PATMI Excluding Exceptional Items (S$ million)

    162.7

    141.6

    14.9

    128.5

    111.8

    14.9

    Earnings Per Share (cents) *

    6.66

    6.74

    (1.2)

    5.26

    5.26

    * Earnings from Operations (Excluding exceptional items – negative goodwill net of transaction costs), based on weighted average number of shares of 2,442,280,720 shares for H1 FY2012 compared to 2,099,381,586 shares for H1 FY2011.

    Olam International Limited (“Olam” or the “Company”), a leading global, integrated supply chain manager and processor of agricultural products and food ingredients, today reported Profit After Tax of S$186.8 million for the half year ended December 31 2011, an increase of 6.4% over the previous corresponding half year (“H1 FY2011”) and operational Profit After Tax and Minority Interests (PATMI) of S$162.7 million, up 14.9% over H1 FY2011.

    Sales volume registered strong growth of 15.8% year-on-year to 4.52 million metric tons. Net Contribution (NC) improved 18.5% to S$607.1 million during the half year.  NC Margin Per Ton grew by 2.4% from S$131 to S$134. 

    The relatively recession-resistant food category accounted for 77.6% of revenue and 83.2% of volumes. More importantly, this segment recorded strong NC growth of 32.1% and NC Per Ton growth of 12.2% over the previous period. The Industrial Raw Materials (IRM) segment accounted for 22.4% of revenue and 16.8% of the volumes in H1 FY2012, registering volume growth of 7.4%. Due to very difficult trading conditions, NC in this segment declined 24% compared to the previous period.

    Olam’s Group Managing Director and CEO Sunny Verghese commented: “Our H1 FY2012 results reflect the resilience of the Olam model as we have continued to deliver positive operating results, even in periods of uncertainty and volatility in many global markets. The food and food-related segments of our business continue to demonstrate robust growth across businesses, geographies and value chain activities. This strong performance has helped to offset the results achieved in our industrial raw material business which is more recession-sensitive, and therefore continues to face demand and margin pressures.”

    Olam’s Group CFO, Krishnan Ravikumar explained the results: “Our H1 FY2012 performance amidst a period of stress and volatility provides further validation of our strategy. We continue to focus on growing our business, both organically in our supply chain core and through acquisitions in the mid and upstream segments of the value chain. Our growth ambitions are supported by a strong and resilient balance sheet with adequate liquidity and the flexibility to perform across cycles.”

    Segmental Review

    Edible Nuts, Spices & Beans

    First Half

    Quarter 2

    FY2012

    FY2011

    Change
    (%)

    FY2012

    FY2011

    Change
    (%)

    Sales Volume (metric tons)

    640,690

    560,695

    14.3

    274,652

    232,867

    17.9

    Sales Revenue (S$m)

    1143.6

    1014.8

    12.7

    624.3

    589.5

    5.9

    NC (S$m) 

    152.4

    111.8

    36.3

    72.5

    56.7

    28.0

    NC Per Ton (S$)

    238

    199

    19.3

    264

    243

    8.6

    The Edible Nuts, Spices & Beans segment continued on its strong growth trajectory in volume, NC and NC Per Ton in H1 FY2012. The period marked the commencement of commercial trials of the mechanical cashew processing factories in Ivory Coast and Nigeria, both of which are on track to meet the targeted productivity improvements and cost savings while maintaining output and quality standards. The Almond crop in Australia is progressing well with a record crop expected this season. Our investment to build an Almond processing facility in Australia is tracking as per plan and the plant is expected to commence production in FY 2013. 

    Confectionery & Beverage Ingredients

    First Half

    Quarter 2

    FY2012

    FY2011

    Change
    (%)

    FY2012

    FY2011

    Change
    (%)

    Sales Volume (metric tons)

    729,816

    645,698

    13.0

    443,662

    413,965

    7.2

    Sales Revenue (S$m)

    2,880.7

    2,420.4

    19.0

    1,787.0

    1,687.3

    5.9

    NC (S$m) 

    163.3

    123.2

    32.6

    100.1

    79.1

    26.6

    NC  Per Ton (S$)

    224

    191

    17.2

    226

    191

    18.3

    The Confectionery & Beverage Ingredients segment registered strong growth during the period with the Cocoa business continuing to grow in volume. It is expected to meet its procurement targets despite forecast of a short crop this year. The Coffee business in the Central Andean region saw a turnaround during the period and is now expected to start contributing to earnings from this year onward. The soluble coffee factory in Vietnam has registered strong performance.

    Food Staples & Packaged Foods

    First Half

    Quarter 2

    FY2012

    FY2011

    Change
    (%)

    FY2012

    FY2011

    Change
    (%)

    Sales Volume (metric tons)

    2,390,470

    1,989,513

    20.2

    1,493,233

    1,254,650

    19.0

    Sales Revenue (S$m)

    1,962.5

    1,624.7

    20.8

    1,013.6

    903.4

    12.2

    NC (S$m) 

    225.5

    174.8

    29.0

    144.3

    112.3

    28.5

    NC  Per Ton (S$)

    94

    88

    7.4

    97

    90

    7.8

    The Food Staples & Packaged Foods segment registered the highest volume growth across all our segments, driven by market share gains in our Rice and Grains businesses in the African markets. This period saw the successful commissioning of our wheat mill in Ghana where trial production is currently underway. The Dairy and Sugar businesses continue to operate in markets more sensitive to difficult global economic conditions and the performance is currently expected to be below plan this year. During H1 FY2012, we concluded the acquisition of Trusty Foods Ltd (TFL), a tomato paste canning facility, and United Biscuits Ltd (UBL) in Ghana.  These companies are currently in the process of being integrated with Olam’s Packaged Foods business in West Africa. While UBL is expected to be a contributor to Olam’s FY2012 earnings, the TFL plant will require refurbishment and is expected to commence production in Q1 FY2013.

    Industrial Raw Materials

    First Half

    Quarter 2

    FY2012

    FY2011

    Change
    (%)

    FY2012

    FY2011

    Change
    (%)

    Sales Volume (metric tons)

    761,535

    708,902

    7.4

    448,889

    421,196

    6.6

    Sales Revenue (S$m)

    1,728.9

    1,434.2

    20.5

    1,061.8

    860.6

    23.4

    NC (S$m) 

    65.5

    86.2

    -24.0

    35.1

    49.4

    -29.0

    NC  Per Ton (S$)

    86

    122

    -29.3

    78

    117

    -33.3

    The Industrial Raw Materials segment is more sensitive to economic cycles and our Cotton and Wood Products businesses continued to face challenging market conditions in H1 FY2012. Our Australian and US cotton origination and marketing operations underperformed relative to past years during this period which put further pressure on margins and led to a decline in NC Per Ton in this segment. On the other hand, the Wool, Rubber and SEZ businesses in this segment have done well during H1 FY2012; the prospects for the remainder of FY2012 appear to be relatively more favourable. The SEZ business in particular has significantly outperformed during the period. 

    The Commodity Financial Services (CFS) business registered a NC of S$0.4 million in H1 FY2012 as compared to a NC of S$ 16.2 million during the first half in the previous year. Given the exceptional volatility in these markets, the CFS team decided to reduce investment and risk capital exposure for much of this period. While the business was profitable in the second quarter, the business team is cautiously increasing market participation as the trading conditions and arbitrage opportunities improve. We continue to invest in long-term strategic initiatives in this business, including market making, risk management solutions and fund management.

    Prospects

    The Group constantly reviews corporate development opportunities which are in line with its corporate growth strategy. Some of these are in the nature of acquisitions and joint-ventures. The Group is currently in discussion with various parties on such opportunities. If any of these opportunities were to materialise, these may have an effect on the financials of the Group. The Group continues to remain positive about its prospects for the remaining part of FY2012.

    Note: This release should be read and understood only in conjunction with the full text of Olam International Limited’s H1 FY2012 Financial Statements lodged on SGXNET on February 14, 2012. 

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