Olam's PATMI dips by 13.6%

Weakness seen in Olam's Industrial Raw Materials segment, an outcome of events in the Cotton market, severely affected the Group's overall performance.

In a release, Olam International Limited, a leading global, integrated supply chain manager and processor of agricultural products and food ingredients, reported Profit After Tax of S$289 million for the nine months ended March 31, 2012 compared to S$301.7 million a year ago.

Profit After Tax and Minority Interest was S$261.4 million for 9M FY2012 compared to S$302.4 million in 9M FY2011. PATMI declined 13.6% as compared to the prior period, mainly due to exceptional items recorded in 9M FY2011. PATMI excluding exceptional items declined by 1.9% as compared to the prior period.

Olam’s Group CEO, Sunny Verghese commented: “While many of our businesses continued to perform well, we are not entirely immune to the difficulties being experienced in many global markets. This is reflected in the results of some of our operating businesses which are more sensitive to these external events. As a result, the Group’s 9M FY2012 performance has been a tale of two parts.

The first part reflects the performance of the Food category which comprises three out of our five reporting segments and accounts for 78.4% of revenue. This category reported strong growth in both volumes and margins for the period. Sales Volume increased by 20.6% and NC increased by 30.9% in 9M FY2012 compared to 9M FY2011. NC per ton increased by 8.5% from S$128 in 9M FY2011 to S$139 in 9M FY2012.”

He continued by saying, “The second part reflects the performance of the Non-food category – the Industrial Raw Materials and the Commodity Financial Services segments. The IRM segment continued to be impacted during the third quarter of FY2012, following on its weak performance in the first half of this year, primarily as a result of the exceptional events that occurred in the Cotton markets during H1 FY2012.

The CFS segment found very few arbitrage and relative value trading opportunities during this period and was therefore in a risk-off mode for much of this period, resulting in a smaller contribution. It should be noted that the prior year reflected very strong growth in positive operating results across all segments, particularly the Industrial Raw Materials segment.

This year we have consolidated and improved on these gains in many areas despite the performance in IRM and CFS segments. The events relating to the IRM and CFS segments are seen as cyclical rather than structural in nature. We therefore remain positive about the long term earnings potential in these segments and for the Group as a whole.”