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Olam Q2 profit drops 36% to S$94m
COMMODITY trader Olam International has posted a net profit of S$93.9 million in the second quarter, down 36.4 per cent from the same period a year earlier on weaker earnings from coffee, peanuts and edible oils.
Excluding exceptional items, core profit fell 40.6 per cent to S$91.4 million.
Revenue climbed 13.9 per cent to S$7.4 billion, supported by a 48.3 per cent rise in sales volume, led by the food staples and packaged foods segment.
Olam's group chief operating officer A. Shekhar said: “Our performance was satisfactory across the business, and must be seen against the particularly strong performance in the same period last year. Our second quarter results were impacted by the continued down cycle in coffee, unprecedented weather conditions in peanut farming in Argentina and lower contribution from edible oils."
Chief executive Sunny Verghese said: "We expect stronger prospects for our business for the rest of the year."
The group's earnings before interest, tax, depreciation and amortisation (Ebitda) declined 17.6 per cent to S$307.9 million.
Ebitda from the confectionery and beverage ingredients segment rose 4.9 per cent to S$117.1 million despite a fall in volumes, as better results from cocoa supply chain and processing offset tough coffee conditions that started in the fourth quarter last year.
But Ebitda from the edible nuts, spices and vegetable ingredients segment fell 13.8 per cent to S$100.9 million as the peanut farming business in Argentina suffered from drought conditions and currency devaluation, offsetting the stronger performance from cashew, almonds and hazelnuts.
Ebitda from food staples and packaged foods dived 32.7 per cent to S$66.9 million, owing mainly to volaile trading conditions in the edible oils platform, higher period costs in Olam Palm Gabon and reduced share of income from Nauvu Investments after it was sold in March 2018.
Second-quarter earnings per share was 2.52 Singapore cents, down from 4.91 Singapore cents in the same period last year.
Free cash flow to equity in the second quarter improved to S$242.1 million from S$28.7 million in the same period last year.
Net gearing as at June 30 was 1.46 times, unchanged from Dec 31 last year.
Net asset value per share was 198.65 Singapore cents as at June 30, from 200.05 Singapore cents as at Dec 31 last year.
An interim dividend of 3.5 Singapore cents per share was declared, unchanged from the first half last year.