Olam International reports strong earnings amidst challenging climate

SINGAPORE: Global agri-commodity group Olam International, which deals in many businesses in India, today reported a strong financial performance in the first half of this year despite the current depressed macroeconomic climate.

The group, dealing in peanut, coffee, cotton and sugar businesses in India - posted a strong 48.3 per cent increase in operational profit after tax and minority interest of 223.7 million Singapore dollars first in the first half of the year, ending June 30.

Revenue declined 13.8 per cent to 9.13 billion Singapore dollars as volume tonnage was reduced by 25.7 per cent to 5.9 billion metric tonnes under the company's strategy to reduce volumes or exit lower-margin businesses.

"Our strong performance despite the current depressed macroeconomic climate is testament to our disciplined focus on executing our strategic plan," said Sunny Verghese, company's co-founder, group managing director and CEO.

"We continue to expand selectively in prioritised platforms while reducing our presence or exiting from lower- margin businesses," he said.

In India, Olam saw a three to four per cent annual growth in coffee and cotton volume while it has completed all upgrading and expansion at two sugar mills in Maharashtra and Madhya Pradesh which supplies to Pepsi for the local market.

"We are now operating the mills at full capacity," said Verghese, referring to the Kolhapur and Giridharilal refineries, which were upgraded over the last 18 months.

Currently, Olam is in the midst of completing acquisition of a global cocoa business of the US-based Archer Daniels Midland Company early in the fourth quarter of this year for USD 1.3 billion.

The company has also secured a USD 800 million revolving credit facility, proceeds from which will be used to refinance existing debt, as well as to finance the working capital needs of the US subsidiaries.

Olam International operates in agri-business in 65 countries.