Olam's profits grew 6.9% to $168.88m in Q1

The higher contributions from edible nuts and cocoa boosted earnings.

Olam International began 2019 in abundance after profits edged up 6.9% YoY to $168.88m in Q1 from $157.97m in 2018, an announcement revealed. Revenue also jumped 16.7% YoY from $6.3b to $7.35b.

Its strong performance was attributed to improved operating performance, as well as higher contribution from edible nuts and cocoa. Revenue from the edible nuts and spices segment rose 10% YoY to $962.1m as sales volumes improved, whilst earnings before interest, tax, depreciation and amortisation (EBITDA) was 14.9% higher at $156m thanks to improved contribution from the firm’s cashew, almonds, hazels, and spices businesses.

Similarly, its revenue from the food staples and packaged foods division climbed 32.5% YoY to $3.5b mainly driven by the growth in grains trading. That said, EBITDA slipped 18% YoY to $82.3m due to reduced contributions from sugar and rice.

Confectionary and beverage ingredients saw a 9.4% decline in revenue to $1.7b due to lower cocoa and coffee prices, in addition to reduced coffee volumes. However, EBITDA skyrocketed 118.5% YoY to $133.7m thanks to improved margins in the cocoa business in both supply chain and processing operations.

Meanwhile, the industrial raw materials, infrastructure and logistics segment recorded a 31% YoY increase in revenue to $1.2b, whilst commodity financial services reported an EBITDA of $10.2m.

“We have started well in executing the four key pathways of our 2019-2024 Strategic Plan, which focus on strengthening our high-growth businesses and getting closer to customers based on changing consumer preferences,” CEO and co-founder Sunny Verghese said in a statement.

During the quarter, Olam acquired Indonesia’s largest cocoa processor, PT Bumitangerang Mesindotama (BT Cocoa), for approximately $121.31m.

The firm also exited its sugar trading business, the fundamental fund business, wood products business in Latin America, as well as its peanut farming and processing operations in Argentina.

Also read: Olam International to shut its sugar trade desk

It also announced its proposed acquisition of Dangote Flour Mills in Nigeria for an enterprise value of $489.99m.