Olam to post one-time Q4 net gain of S$72m from restructuring initiatives

Singapore

AGRI-FOOD giant Olam International expects to record a net one-time post-tax gain of about S$72 million for its fourth quarter ended Dec 31.

This comes as the group has executed various restructuring initiatives under its 2019-2024 strategic plan, Olam said on Monday.

During Q4, Olam announced the sale of the real estate assets of its onion and garlic processing facility in California, the sale of permanent water rights in Australia and the divestment of a 10 per cent stake in GSEZ SA, a subsidiary of an associate company. The transactions generated a one-time post-tax capital gain of around S$372 million.

However, Olam will also recognise some S$300 million in one-off exits costs, losses on disposal and/or impairment on other deprioritised assets identified in the strategic plan. These assets include tomato processors in the US; coffee plantations in Zambia, Brazil, Tanzania and Laos; as well as the edible oils processing operations in Mozambique. Olam's board has now completed its review of restructuring and/or divestment actions for these assets.

Therefore, the company will record a net one-time post-tax gain of about S$72 million arising from exceptional or one-off items in its unaudited financial statements for the quarter.

It will release its Q4 results on Feb 28, before trading hours.

Last month, the commodity trader majority-owned by Singapore's Temasek Holdings announced that it was reorganising its businesses into two new operating groups.

One unit, Olam Food Ingredients, will consist of its cocoa, coffee, edible nuts, spices and dairy businesses. The other, Olam Global Agri, will include grains and animal feed, edible oils, rice, cotton and commodity financial services.

The group's reshuffle could also see the listing of its food ingredients units first in two years, followed a year later by the agricultural supply business, Olam International's chief executive Sunny Verghese told The Business Times in an interview last month.

The company's 2019-2024 strategic plan was announced in January 2019.

Olam shares finished at S$1.82 on Monday, down by S$0.01, or 0.55 per cent, after the announcement.