As Nigeria seeks to boost agricultural production, Olam the global leading agribusiness giant with operations in 70 countries including Nigeria, is looking unto its Nigerian businesses to boost its earnings.
Olam on 12 August reported a 73% increase in profit after tax (and minority interest) to S$228.6 million for the first six months of the year ended 30 June, 2016.
Speaking on the results, Olam’s Co-Founder and Group CEO Sunny Verghese said: “Our strong operational and financial performance amid ongoing global macroeconomic volatility validates our differentiated strategy. We look forward to generating value from our recent initiatives, including the flour and pasta manufacturing facilities in Nigeria, our enlarged peanut shelling business in the US as well as our JV in Japan with strategic partner Mitsubishi Corporation. Our uniquely shaped portfolio and strong pipeline of gestating assets will contribute to earnings going forward.”
Olam also reported that it had recently invested US$150 million to set up two state-of-the-art animal feed mills, poultry breeding farms and a hatchery in Nigeria.
But the company attributed the increase in half year 2016 profits to “lower exceptional losses from buying back higher priced bonds in both periods. Profit after tax and minority interest from actual operations was only up 4.9% at S$241 million in the same period.
The company also reported a marginal growth in earnings before interest, taxes depreciation and amortization by 2.1% to S$648.4 million driven by growth from the Confectionery and Beverage Ingredients and Food Staples and Packaged Foods segments, which offset lower contribution from other segments.
Net finance costs declined from S$224.3 million in first half of 2015 to S$191.1 million in first half 2016 as a result of the initiatives to optimise loan tenures and reduce cost of borrowings.
Sales volumes increased 15.4% as all segments except Edible Nuts, Spices and Vegetable Ingredients registered higher volumes. Revenues grew 6.7% year-on-year as lower prices of some commodities offset the impact of higher volumes according to the company’s report.
Olam International is a leading agri-business operating across the value chain in 70 countries, supplying various products across 16 platforms to over 16,200 customers worldwide. Headquartered in Singapore and listed on the SGX-ST on February 11, 2005, Olam currently ranks among the top 50 largest listed companies in Singapore in terms of market capitalisation and is a component stock in the S&P Agribusiness Index and the DAXglobal Agribusiness Index.
