Olam suffers 13.7% profit decline

This is despite sales volume growing 26.3%.

In a release, Olam International Limited reported Profit After Tax and Minority Interest (PATMI) of S$370.9 million for FY2012 compared to S$429.8 million in FY2011, a 13.7% decline. PATMI excluding exceptional items declined by 4.6% as compared to the prior period.

During FY2012, Sales Volume grew 26.3% to 10.7 million metric tons while Sales Revenue increased 8.2% to S$17.09 billion. Overall NC grew 13.0% to S$1,381.8 million. While Sales Volume rose, NC per ton was lower at S$129 compared to S$145 in FY2011, impacted primarily by lower NC from the Non-food category.

Sales Volume in Q4 FY2012 increased 50.7% to 3.5 million metric tons. Sales Revenue growth was lower at 12.8% during the period as a result of lower commodity prices across most products. NC growth was 8.1%, moderated by the lower contribution from the Non-food
category during the quarter and the high base of the previous year. For the same reason, NC per ton margin declined to S$127 from S$178.

Olam’s Executive Director – Finance and Business Development, Shekhar Ananthraman explained the results: “The food-related business segments continued their solid trajectory of growth from the last two years and accounted for 76.4% of Group revenue and 87.0% of NC.
Sales Volume increased by 31.5% and NC increased by 31.6% compared to FY2011.

“The Non-food categories consisting of IRM and the Commodity Financial Services (CFS) segments, however, registered a decline in NC due to unfavourable market conditions and some outlier events experienced during FY2012. The management team has navigated well through these exceptionally volatile market conditions, which adversely impacted most industry participants. In the CFS segment, we started participating more actively in relative value and arbitrage trading opportunities in Q4 FY2012, which helped register the best quarterly performance in FY2012 for this segment. We continue to make strong progress in implementing our strategic plan and remain confident about the fundamentals of our industry and prospects for our business” he added.