Olam International Q3 profits fell 14.2% to $20.7m

It blamed tough trading conditions in coffee and weaker performance from its peanut business and commodity financial services.

Olam International saw its Q3 profits drop 14.2% to $20.7m from $24.11m in 2017, an announcement revealed. However, its revenue jumped 23.6% to $8.29m from $6.71m.

The decline in profits was primarily caused by tough trading conditions in coffee and lower contribution form the peanut business and commodity financial services (CFS), according to its financial statement.

Operational profit after tax and minority interests also fell 13.8% to $20.7m from $24m in 2017, the firm noted.

Olam International saw its profits fall 36.4% YoY to $93.91m in Q2 on the back of weak sales from coffee, peanuts and edible oils segment.

Also read: Olam International profit crashed 36.4% to $93.91m in Q2

Its edible nuts, spices and vegetable ingredients segment reported a 4.2% decline in revenue to $3.2b due to lower peanut sales, whilst its food staples & packaged foods and industrial raw materials, ag logistics & infrastructure saw revenues grow 60.9% and 6%, respectively.

Earnings before interest, tax, depreciation and amortisation (EBITDA) also fell 5.7% from $243m in Q3 2017 to $229.1m due to reduced contribution from all segments excluding confectionary & beverage ingredients which saw EBITDA improve 12.1% to $278.9m, the statement noted. This came as a result of strong performance in the cocoa supply chain, and compressing compensated for weaker results from coffee which continued to face difficult market conditions.

CFS reported $31.9m EBITDA losses as a result of losses from the funds business, Olam added.

Meanwhile, firm’s wholly owned subsidiary Olam Americas Inc. priced a $138m (US$100m) issuance of five-year fixed rate notes via a private placement at a fixed coupon of 4.35% in July. Olam Treasury (OTPL) also secured a loan facility of approximately $265m (JPY30b) in the Japanese loan market in September.

“Our focus on capital productivity has resulted in delivering $602.4m in free cash flow to equity YTD,” Olam International executive director and COO Shekhar Anantharaman said.

Whilst global markets are experiencing heightened political and economic uncertainties, Olam International said its portfolio provides a resilient platform to navigate changes in both the global economy and commodity markets.

“Olam will continue to execute on its 2016-2018 strategic plan for the rest of 2018 and focus on growing its prioritised platforms,” the firm said. “It remains focused on turning around underperforming businesses, ensuring gestating businesses reach full potential and delivering positive free cash flow.”