Olam Plunges into the Red But Veg Ingredients Business Shines

29 Feb 2016 --- Olam International, the food and agriculture business based in Singapore, has reported a $209m loss in the fourth quarter but its vegetable ingredients business enjoyed a strong quarter.

Olam’s quarterly profits fell year-on year from a $120 million profit in 2014 to a $209 million loss in 2015 after it took a financial hit of $192 million due to writing down the value of its investment in PureCircle, which markets Stevia sugar substitutes.

Revenues were up 11.7 percent to $5.4 billion in the quarter.

One of the world’s largest food traders, Olam has sold stakes in its Australian grains and packaged food business and completed its $1.2 million purchase of Archer-Daniels-Midland Co’s coca business in October last year.

In the quarter, Olam’s Edible Nuts, Spices and Vegetable Ingredients division saw volume sales lift from $240 million to $464 million while revenues were up from $1 billion to $1.2 billion.

The division was helped by higher prices of almonds and cashews, although its Argentinian business unperformed.

Volume Sales in its Confectionery and Beverage Ingredients were up from $370 million to $473 million while revenues were up from $1.5 billion to $2 billion.

The division was helped by higher cocoa and coffee sales.

In Food Staples and Packaged Foods, which accounts for around one third of Olam’s business, volume sales nudged up from $2.3 billion to $2.4 billion but revenues were down from $1.8 billion to $1.7 billion. The reduction was down to lower commodity prices.

It was also hit by its dairy farming business in Uruguay underperforming and a lower contribution from sugar and palm trading.

Olam is looking to GROW its business in Africa.

Earlier this year, it upped its milling capacity in sub- Saharan African and began rubber production in the Gabon.

Olam co-founder & group chief executive Sunny Verghese said: “We continued to deliver strong operational performance in 2015 despite significant volatility in global commodity and currency markets.”

“Reported performance was impacted by our decision to change the basis of presentation of our equity investment in PureCircle, although this had no impact on our total equity or cash flow position. We continue to believe in the strategic position, operating performance and growth prospects of PureCircle.”

“We took significant actions in 2015 to execute on our strategy including the acquisition of ADM Cocoa and McCleskey Mills, and more recently, the wheat milling and pasta manufacturing assets of the BUA Group in Nigeria.”

“Another key milestone was the strategic partnership with Mitsubishi Corporation, which is an integral part of re-aligning our shareholder base with more long-term shareholders.”