Olam's PATMI grew 6.1% to $179.1m in Q1

It was thanks to gains from selling their stake in Far East Agri.

Agri-firm Olam International saw its profit after tax and minority interests (PATMI) edge up 6.1% YoY to $179.1m in Q1 from $168.8m in 2019, a local bourse filing revealed.

This comes on the back of $43.2m in net gains during the quarter, thanks to the divestment of the company’s remaining 50% stake in Far East Agri, which held its sugar refinery assets in Indonesia. The reduction of their effective interest in ARISE P&L from 40.5% to 30.6% also contributed to the PATMI.

Revenue likewise rose 4.6% YoY to $7.68b from $7.35b over the same period. EBITDA declined 7% to $390.9m due to lower contributions from edible nuts, spices, coffee, dairy and edible oils, but was countered by improvements in cocoa, grains and animal feed & protein and cotton.

Operational PATMI crashed 24.9% YoY to $135.9m in line with the lower EBITDA and due to higher finance costs arising from increased working capital, and higher depreciation and amortisation.

“The impact on demand from COVID-19 varied across products,” said Olam. “We experienced lower demand in some of our non-food categories like cotton and in food products with significant out-of-home consumption like edible oils and coffee. We also saw lower demand in almonds and dairy due to the lockdown in China. However, demand for most food staples was generally resilient and spiked in some cases due to the pantry restocking effect both at the household and retail level.”

Further, the firm noted that since 80-85% of the group’s revenues are in the food category, demand is less sensitive to recession or economic downcycles.