Olam International is to set up a cocoa processing facility in Indonesia as that side of the Singapore agri-food group’s business continues to perform strongly, it said.
Olam plans to spend US$61m on the site, although the company, which announced the move on Friday (16 May) did not disclose where the factory will be located.
The group did say the plant will produce cocoa butter, cake and powders. It will have an initial capacity of 60,000 metric tonnes and is expected to start operations in early 2016.
“We strongly believe that we are entering a phase of exceptional growth in Asian demand, which will redefine the consumption trends for cocoa and the requirements for high quality products by our customers,” Gerry Manley, Olam’s MD and global head of cocoa, said.
News of the investment came 24 hours after Olam reported mixed financial results for the first nine months of its financial year.
Olam reported an 88.6% jump in profit after tax and minority interests to S$576.7m (US$461.6m) However, the result included an exceptional fair value gain of S$271.0m from the revaluation of its holding in stevia supplier PureCircle. Operational PATMI, which excludes exceptional items, declined 7.9% to S$276.9m.
EBITDA was up 2.7% at S$900.1m despite a drop in earnings from its food business. Higher earnings from Olam’s industrial raw materials arm helped its EBITDA.
Sales fell 4.5% to S$13.66bn in the nine months to the end of March. Revenue from Olam’s food division was up, helped by sales of its ingredients. Olam cited a “continued strong performance” from its cocoa business.