Olam International (VC2) H1 2024 earnings summary

Executive summary

• Sales volume rose 13.9% to 24.3 million tons, with revenue up 9.1% year-over-year to S$26.92 billion, driven by growth across core segments.

• EBIT grew 8.3% to S$888 million, supported by strong ofi performance (EBIT up 71.5% to S$475 million), while Olam Agri EBIT declined 8.4% to S$512 million.

• PATMI remained steady at S$48.1 million, as EBIT growth was offset by higher financing and tax costs; profit for the period fell 42.4% to S$67.2 million due to higher costs and taxes.

• Interim dividend of 3.0 cents per share declared, unchanged from the prior year; 25.1 million shares bought back for S$28.5 million.

• Group remains committed to listing ofi and Olam Agri, while exploring other strategic options to unlock value.

Financial highlights

• Revenue: S$26.92 billion, up 9.1% year-over-year; EBIT: S$888 million, up 8.3%; adjusted EBIT at S$916 million.

• PATMI: S$48.1 million, steady year-over-year; operational PATMI down 60.1% to S$73.5 million.

• Free cash flow to equity was negative S$5.4 billion, mainly due to a S$4.9 billion increase in working capital.

• Net gearing increased from 1.74x to 2.60x, mainly from price-led inventory and margin deposit increases; adjusted net gearing at 1.04x.

• Sufficient liquidity of S$24.1 billion as of June 2024, including S$3.5 billion cash and S$9.3 billion in unutilized bank lines.

Outlook and guidance

• H2 2024 expected to remain affected by geopolitical and macroeconomic factors, though inflationary pressures may soften and interest rate cuts are anticipated.

• ofi maintains medium-term guidance of low- to mid-single digit volume growth and high single-digit adjusted EBIT growth.

• Olam Agri to continue scaling global origination and value-added processing, leveraging partnership with SALIC.

• Strategic review ongoing for Remaining Olam Group to unlock shareholder value; IPOs for ofi and Olam Agri remain a priority.