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Olam posts 30% fall in Q3 net profit, to achieve free cash flow generation by 2016
OLAM International reported on Friday that its net profit for the fiscal third quarter ended Sept 30, 2015, fell 30 per cent to S$31.0 million, from S$44.3 million a year ago.
The results included a net exceptional loss of S$3.2 million, compared to a net exceptional gain of S$12.1 million a year ago.
Sales rose 4 per cent to S$4.5 billion. All segments reported steady growth in Q3 except food staples and packaged foods which faced lower volumes, prices and the continued underperformance of its upstream dairy operations.
Olam said sustained focus on capital management has helped reduce gearing and borrowing costs. Net gearing of 1.43 times at the end of September 2015 was significantly lower than 1.85 times as at end-December 2014, mainly arising from the placement of shares to Mitsubishi Corporation. Gearing level remains in line with its 2016 objective of at or below 2.0 times.
The commodities group remains "on track to achieve our strategic plan objectives of profitable growth and free cash flow generation by 2016''.
"With Mitsubishi Corporation as a new long term strategic shareholder, we are in a much stronger position to accelerate growth in prioritised platforms,'' it said. Mitsubishi is Olam's second largest shareholder with a 20.0 per cent stake, after Temasek Holdings which holds a 51.4 per cent stake.
The board had declared an interim dividend of 2.5 cents per share for the current financial period. The dividend was paid out on Aug 31, 2015.