Olam Q1 earnings up 6.9% to S$168.9m on higher revenue

AGRI-FOOD company Olam International's first-quarter net profit increased 6.9 per cent to S$168.9 million from S$158 million for the year ago period, on higher revenue that was partly offset by bigger depreciation and finance costs.

Earnings per share for the quarter to March 31 came in at 4.89 Singapore cents versus 4.57 cents a year ago. Olam's shares last traded down 2.2 per cent, or S$0.04 at S$1.76 on Monday.

No dividend was declared for the period under review, the same as the previous year.

Revenue for the period jumped 16.7 per cent to S$7.35 billion, up from S$6.30 billion a year ago.

Ebitda (earnings before interest, taxes, depreciation and amortisation) grew 14.2 per cent to S$420.3 million from S$368.1 million on increased contribution from edible nuts and cocoa, which offset lower contributions from peanuts, rice and sugar.

Edible nuts and spices revenue increased 10 per cent to S$962.1 million on better sales volume.

Olam's confectionery and beverage ingredients, which includes cocoa, actually saw revenue decline 9.4 per cent to S$1.7 billion on lower cocoa and coffee prices and reduced coffee volumes.

The company said improved supply chain and processing operation margins in the cocoa business contributed to higher Ebitda.

"Our diversified portfolio enabled us to better navigate continuing volatile macro and industry headwinds," said co-founder and  group CEO Sunny Verghese.

"We have started well in executing the four key pathways of our 2019-2024 Strategic Plan, which focus on strengthening our high-growth businesses and getting closer to customers based on changing consumer preferences."

He said Olam's recent acquisition of BT Cocoa in Indonesia and proposed acquisition of Dangote Flour Mills in Nigeria are examples of investing further in its leading businesses. 

"We have also successfully exited our sugar trading business, the fundamental fund business, our wood products business in Latin America, and our peanut farming and processing operations in Argentina in Q1 2019 as planned."