Olam's FY2019 profits soared 62.2% to $564.16m

Higher contributions from cocoa, grains, and animal feed businesses drove the gains.

Olam International ended the decade on a high note as its profits rallied 62.2% YoY to $564.16m in FY2019 to reverse the 40% decline in FY2018, its SGX filing revealed. Revenue also rose 8.2% YoY to $32.99b over the same from $30.48b in FY2018.

For Q4 2019, profits skyrocketed $316.2% YoY to $313.42m from a dismal $72.31m in Q4 2018. Revenue for the quarter edged up 3.3% YoY to $8.74b from $8.46b a year earlier.

The strong results were attributed to higher contributions from its cocoa, grains and animal feed businesses.

A final dividend of $0.045 per share was recommended, bringing the total dividend for 2019 at $0.8 per share.

The group’s earnings before interest, taxes, depreciation, and amortization (EBITDA) stood at $1.55b in FY2019, 26.6% YoY higher than the $1.24b reported for FY2018. Olam said that all segments reported increases for the period, except for the industrial raw materials, infrastructure, and logistics segment.

Also read: Olam International posts one-time post-tax gain of $72m

Revenue from the food staples and packaged food segment jumped 21.5% YoY to $17.9b as grains trading volumes grew. EBITDA jumped 57.4% YoY to $454.6m.

Meanwhile, the edible nuts and spices segment’s revenue jumped 2.9% to $4.9b on the back of improved sales of nuts; whilst EBITDA was 0.7% higher at $342.4m on improved performance of cashew.

Meanwhile, EBITDA of confectionary and beverage ingredients grew 26.6% to $562.1m as Olam’s cocoa business margins improved, although revenue shrank 6.2% to $6.7b due to lower cocoa volumes and coffee prices.

The commodity and financial service segment reported an EBITDA of $19m to reverse a $13.1m loss in FY2018.

In contrast, revenue of industrial raw materials, infrastructure and logistics decreased by 6.3% YoY to $4.2b, and EBITDA dropped 1.5% YoY to $173.6m, due to lower sales volumes and lower cotton prices.

The group expressed confidence that they will be able to weather any short-term volatility caused by the COVID-19 outbreak.

“Building on our new Strategic Plan, we recently announced our plan to re-organise Olam into two new coherent operating groups – Olam Food Ingredients (OFI) and Olam Global Agri (OGA) to unlock and maximise the Company’s long-term value,” added Sunny Verghese, Olam’s CEO and co-founder.

Also read: Olam restructures into two new operating groups

Olam will begin to report their financial results at a half-yearly basis following listing rule amendments.