Olam H1 profit up five times at S$1.9 billion on Olam Agri spin-off; eyes ‘full value’ from ofi, divestments

[SINGAPORE] Olam Group aims to “extract full value” from its food ingredients unit, ofi, while divesting other assets, following the spin-off of its agribusiness arm Olam Agri, said management on Friday (Aug 14). 

“The focus internally is going to be purely on ofi and OGH (formerly known as the remaining Olam Group), which are essentially the continuing businesses,” said group chief financial officer Venkataraman Krishnan at the group’s earnings briefing for the first half of the year ended Jun 30. 

The briefing was attended by members of Olam Group’s new senior management, including Shekhar Anantharaman, group executive director and CEO of ofi, as well as Gautam Wadhwa, CEO of OGH. 

In April, Olam Group underwent a leadership restructuring that saw group CEO Sunny Verghese and chairman Lim Ah Doo step down from their roles at the parent company.

The agribusiness giant on Friday posted an almost five times rise in net profit to S$1.9 billion for its H1, from S$323.8 million in the year-ago period.

This was driven by a total one-off gain of about S$1.8 billion following the divestments of its 44.58 per cent stake in Olam Agri and the entirety of IT and digital services unit Mindsprint.

Olam Group noted that it also recognised an accounting gain on the valuation of its remaining stake in Olam Agri.

However, net profit from continuing operations in OGH and ofi fell 66 per cent during the six months to S$55.6 million from S$163.7 million a year earlier.

This decline was largely due to the absence of a non-cash foreign exchange gain of S$187.4 million recorded in the year-ago period.

Olam Group’s revenue was also down 18.3 per cent at S$12.5 billion from S$15.3 billion in H1 FY2025.

This, Olam Group said, was mainly due to the “marked drop in input prices in ofi, namely cocoa and coffee, coupled with lower volumes in OGH”.

Earnings per share (EPS) stood at S$0.5023, up from S$0.0816 in H1 FY2025. The EPS comprises S$0.0104 from the group’s continuing operations and S$0.4919 from its discontinued operations.

The group declared a total dividend of S$0.07 a share, comprising an interim dividend of S$0.01 a share and a special dividend of S$0.06 a share, to be paid out on Aug 31.

The total dividend previously was S$0.02 a share.

The group’s net gearing stood at 0.93 times, down from 2.09 times a year earlier, which the company attributed to “reduced net debt with deleveraging at OGH from divestment proceeds and lower working-capital-related debt in ofi”.

What’s next? 

Following the divestment of the group’s 44.58 per cent stake in Olam Agri, management previously noted that it intends to sell its remaining 19.99 per cent stake within three years through a call/put option. 

Meanwhile, OGH’s Wadhwa noted that his mandate is to “responsibly divest” four key assets: Africa-based Olam Palm Gabon, Olam Rubber Gabon, tomato mixes and biscuits business Caraway; and Russia-based milk producer Rusmolco. 

He added that these four assets are “all self-sustaining” and do not require additional capital injection from Olam Group. 

Previously, OGH also included digital farmer services platform Jiva, which was wound down, as well as Mindsprint and digital decarbonisation consultancy Terrascope, which were divested. The proposed sale of OGH’s stake in port and logistics operator Arise P&L remains in progress, said Wadhwa.

As for ofi, Shekhar noted that the global sourcing of food ingredients “still remains the core” of its portfolio.

“But on top of the global sourcing, now we have a very significant single-ingredient portfolio and product mix,” he added. 

“We are clear that the world is not going to get better, which is not to say that this is gloom and doom, but it is to say that this is a new normal.

“Geopolitics, trade barriers off and on, enhanced volatility, (the) interest-rate environment being uncertain and climate change – all that is real…and all these play to our strengths,” said Shekhar. 

“(Challenges) are core to our business and, managed well, they can be opportunities because there are not very many people who offer the spread and network which can manage them.”

Shares of Olam Group retreated as much as 8.5 per cent on Friday after the results were announced, before closing 7.7 per cent or S$0.10 lower at S$1.20.