Olam International saw first-quarter profits fall almost 3% amid challenges in the agri-food group’s hazelnut and dairy businesses.
The Singapore-based group posted net profit of S$44.3m (US$34.1m) for the quarter to the end of September, down 2.9% on a year earlier.
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EBITDA dropped 11.9% to S$219.4m. Earnings from Olam’s edible nuts, spices and vegetable ingredients business dropped by more than a fifth with a spike in hazelnut prices in Turkey hitting the division.
Olam’s food staples and packaged foods arm reported a 21.3% fall in its EBITDA due to the sale of an 80% stake in its grains business in Australia and the closure of its grains desk in South Africa. The company also pointed to the “under-performance” of its dairy assets in Uruguay.
Revenue dipped 0.5% to S$4.3bn, with sales from the edible nuts, spices and vegetable ingredients and the confectionery and beverage ingredients divisions bith increasing. Sales from the food staples and packaged foods unit dropped due to the company’s moves in grains.
Olam’s executive director of finance and business development, A. Shekhar, said: “The seasonality of our business makes the first quarter traditionally a modest contributor for the year. Lower volumes reflected our deliberate actions to discontinue and restructure lower-margin operations. While the hazelnuts and dairy businesses underperformed for the quarter, the growth trajectory in operational performance and EBITDA across the rest of the portfolio was maintained.”
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By GlobalDataOlam said it expects to finalise the sale of 25% of its packaged foods arm to Japan’s Sanyo Foods during the new financial year.
Earlier this week, after a spike in Olam’s shares prompted an enquiry from the Singapore Stock Exchange, the company revealed it was in talks on “corporate development opportunities”.
