Olam's Q1 profit plunges 92.1% to S$31.26m due to loss from bond buyback

AGRIBUSINESS Olam International on Friday posted a net profit of S$31.26 million for its first quarter ended March 31, 2015, down a hefty 92.1 per cent from S$396.13 million in the year-ago period.

The commodity group said net earnings plunged on the back of a net exceptional loss of S$97.2 million in Q1, mainly from the buyback of bonds, while net earnings in the year-ago period had included an exceptional gain of S$293.9 million.

Revenue for the quarter was down 10.7 per cent at S$4.32 billion, from S$4.84 billion in the year-ago period, as sales volume fell 33.2 per cent to S$2.68 billion from S$4.01 billion in the year-ago period, as the company reduced volumes or exited from lower-margin businesses, and instead focused on growing its prioritised platforms.

The group's capital expenditure in the first quarter was S$301.5 million, compared to S$180 million in the year-ago period, as it included a S$225.9 million investment to acquire US peanut sheller McCleskey Mills Inc.

Olam also generated positive free cash flow to firm of S$120.2 million during the period under review as against negative S$424.8 million in the year-ago period, from higher operating cash and divestment cash flows, as well as lower working capital requirements.

Olam's managing director and CEO, Sunny Verghese, said the company will continue to pursue twin objectives of profitable growth and cash-flow generation while investing in selective opportunities that can enhance shareholder value over time.

Earnings per share for the quarter were 7.45 Singapore cents while net asset value per share was 166.62 Singapore cents. No dividend was declared for the quarter.

On Thursday, the counter had closed trading down three cents at S$2.