Volume in ’000 metric tonnes; Revenue & EBITDA in S$ million
The Edible Nuts, Spices & Vegetable Ingredients segment registered a year-on-year volume decline of 4.3%, revenue growth of 7.7% and EBITDA growth of 17.2% in FY2014. The decline in volume was mostly on lower Cashew volumes while the EBITDA growth was on strong performance from the upstream Almond, US Peanut and dehydrated onion and garlic businesses within the segment.
The Confectionery & Beverage Ingredients segment recorded a decline in volume of 10.6% and revenue of 4.3%. Despite lower volumes, EBITDA grew 6.2%, driven by favourable trading conditions in Coffee and higher contribution from the midstream processing assets, including soluble Coffee in Vietnam and Spain and the newly commissioned Cocoa processing facility in Côte d’Ivoire.
Food Staples & Packaged Foods volumes and revenues declined by 5.3% and 5.9% respectively due to lower Grains and Rice volumes and prices. EBITDA declined by 18.2% due to lower contribution from Grains and Rice, impact of the devaluation of the Ghanaian Cedi on Packaged Foods, Grains and Rice, lower contribution from SIFCA in Palm and continued underperformance in the upstream Dairy operations in Uruguay and Russia.
The Industrial Raw Materials segment saw lower volumes in Wood Products and Fertiliser, leading to a decline of 13.7%, while turnover declined by 20.6%. Despite an adverse impact of lower volumes and backwardation in cotton futures in Q4 FY2014, overall EBITDA increased by 4.1%, supported by a higher contribution from the SEZ.
Commodity Financial Services registered an EBITDA loss of S$24.6million in FY2014 versus a loss of S$20.4million in FY2013.
Olam’s Executive Director of Finance and Business Development, A. Shekhar said: “We have made substantial progress in our efforts to improve cash flow generation by releasing cash from various strategic initiatives and moderating the pace of new investments. We made deliberate choices to reduce volumes and exit lower margin businesses, while maintaining our overall EBITDA.
“We are particularly pleased with the performance of our upstream and midstream investments given that more than half of them are currently gestating and are expected to make a larger contribution in the future.”
The Board of Directors recommends an ordinary dividend of 5.0 cents per share for the year (FY2013: 4.0 cents per share). In celebration of Olam’s 25th anniversary, the Board is pleased to recommend an additional special Silver Jubilee dividend of 2.5 cents per share.
Outlook and Prospects
The long-term trends in the agri-commodity sector remain attractive, and Olam is well-positioned to benefit from this as a core global supply chain business with selective integration into higher value upstream and mid/downstream segments.Olam believes its diversified portfolio with leadership positions in many segments provides a resilient platform to navigate uncertainties in global markets.
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Notes to the Editor:
This release should be read and understood only in conjunction with the full text of Olam International Limited’s Q4 FY2014 and FY2014 Financial Statements and Management Discussion and Analysis lodged on SGXNET on August 29, 2014.
The strategic plan for the period FY2014-2016 announced after Olam’s strategy review in 2013 is premised on “rebalancing profitable growth and cash flow” with the view of generating positive Free Cash Flow to Firm (FCFF) by the end of FY2014, assuming constant prices, and sustaining it going forward.
The year-to-date figures are a better reflection of the Group’s performance as it experiences seasonality in earnings from quarter to quarter due to its participation in upstream, midstream and supply chain management of agricultural commodities across the Northern and Southern hemispheres.