Olam net profit surges 55.9% in nine months FY11

Olam reported a Net Profit After Tax of S$265.9 million for the nine months ended March 31, 2011.

According to Olam, this shows a growth of 55.9% compared to S$170.6 million achieved in the previous corresponding period.

Net Profit After Tax (including exceptional gain) for 9M FY2011 was S$301.7 million, 12.9% higher compared to S$267.2 million achieved in 9M FY2010.

The 9M FY2011 results included an exceptional gain amounting to S$35.9 million, arising from the negative goodwill (net of transaction costs) of NZ Farming Systems Uruguay (NZFSU) during the year. In the previous corresponding period (9M FY2010) the Group recorded exceptional gain of S$96.6 million for the acquisition of tomato processing assets in California.

Net Profit After Tax (excluding exceptional gain) in Q3 FY2011 grew by 48.0% to S$124.0 million from S$83.8 million in Q3 FY2010. Net Profit after Tax (including exceptional gain) for the third quarter ended March 31, 2011(“Q3 FY2011”) was S$126.2 million, 41.4% higher compared to S$89.3 million reported in the previous corresponding quarter (“Q3 FY2010”).

Olam’s Group CFO, Krishnan Ravikumar explained the results: “The strong growth of 55.9% in operational net profits (excluding exceptional gain) in 9M FY2011 was driven by a 19.3% increase in Sales Volume and a 20.6% rise in Net Contribution per tonne. This is one of the strongest periods of growth in Net Contribution per tonne that we have achieved in the last five years. This reflects the effectiveness of our margin enhancing growth initiatives. All five business segments, namely Edible Nuts, Spices & Beans, Confectionery & Beverage Ingredients, Food Staples & Packaged Foods, Industrial Raw Materials and Commodity Financial Services, contributed to the growth in NC.

“We are particularly pleased to have improved our cash-to-cash cycle materially during this period, which helped mitigate an increase in working capital requirements resulting from sharply rising commodity prices. We continue to be disciplined and balanced in our capital allocation decisions to strengthen our portfolio and enhance our margins.” he added.

Olam’s Group Managing Director and CEO, Sunny Verghese said: “We continue to execute well on our Six Year Corporate Strategic Plan (FY2010-2015). The results that we have announced today exceed the milestones that we had set for this stage of the plan. Our 9M FY2011 interim results provide further evidence of the full effectiveness and potential of our growth strategy. We have now built a differentiated and unique business portfolio by investing selectively in attractive-return upstream (plantations) and midstream (value-added processing) growth initiatives, which has helped us to enhance margins and strengthen returns.”