Olam's 1Q earnings grow 6.9% to $169 mil with improved operating performance

SINGAPORE (May 14): Olam International has announced earnings of $168.9 million for 1Q19, rising 6.9% y-o-y from $158 million due to improved operating performance, which was offset in part by increased depreciation and finance costs.

EBITDA grew 14.2% to $420.3 million on increased revenue contribution from Edible Nuts and Cocoa.

Sale of goods & services for the quarter grew 16.7% to $7.3 billion from $6.3 billion previously.

In line with the topline growth, cost of goods sold grew 16.3% to $6.6 billion from $5.6 billion a year ago.

Other income fell 65% to $10.5 million from $30.1 million in 1Q18.

While finance income rose 68% to $37.5 million from $22.3 million a year ago, finance costs widened 28.7% to $141.1 million from $109.7 million in 1Q18.

Depreciation & amortisation rose 30.3% to $124.7 million from $95.7 million a year ago.

Income tax expense for the quarter fell 38% to $20.9 million from $33.7 million previously.

As at end-March, the group’s cash and cash equivalents stood at $2.36 billion compared to $1.8 billion a year ago.

A Free Cash Flow to Equity of $313 million was achieved, while gearing improved to 1.35 times from 1.49 times a year ago.

Sunny Verghese, co-founder and CEO of Olam, says the group’s improved financial performance is due to a diversified portfolio which has helped Olam to better navigate continuing volatile macro and industry headwinds.

“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. Our recent acquisition of BT Cocoa in Indonesia and proposed acquisition of Dangote Flour Mills in Nigeria are examples of us investing further in our leading businesses,” says Verghese.

“We have also successfully exited our Sugar trading business, the Fundamental Fund business, our Wood Products business in Latin America, and our Peanut farming and processing operations in Argentina in Q1 2019 as planned,” he adds.

Shares in Olam closed 2.22% lower at $1.76 on Monday.