Olam International (VC2) H1 2024 earnings summary

Executive summary

• EBIT grew 8.3% year-over-year to S$888 million, with PATMI steady at S$48.1 million, supported by strong ofi profit growth despite high interest rates and volatile markets.

• Sales volume rose 13.9% to 24.3 million tons and revenue increased 9.1% to S$26.9 billion, mainly due to higher sales volumes.

• Board declared an interim dividend of 3.0 cents per share; 25.1 million shares bought back for S$28.5 million in H1 2024.

• Group resilience reflected in ofi's EBIT up 71.5% and Olam Agri's EBIT down 8.4% from a strong prior year.

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

Financial highlights

• EBIT up 8.3% to S$888 million; adjusted EBIT up 8.2% to S$915.7 million; EBITDA up 7% to S$1,258.1 million year-over-year.

• PATMI flat at S$48.1 million as EBIT growth was offset by higher interest and taxes; operational PATMI down 60.1% to S$73.5 million.

• Free cash flow to equity was negative S$5.4 billion, mainly due to higher working capital and interest payments.

• Net gearing increased from 1.74x to 2.6x, 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; secured US$1.5 billion loan post-H1 to refinance debt.

Outlook and guidance

• H2 2024 expected to remain affected by geopolitical and macroeconomic factors, though inflationary pressures may soften.

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

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

• Strategic review ongoing for Remaining Olam Group to unlock shareholder value.